Effective Date of FIN 48 Deferred

The Financial Accounting Standards Board (FASB) has agreed to defer the effective date of FASB Interpretation No. 48 (FIN 48), Accounting for Uncertainty in Income Taxes, until years beginning after December 15, 2007 for “nonpublic” entities. A proposed FASB Staff Position (FSP) related to the deferral was issued on December 19, 2007 and can be found at www.fasb.org.

Prior to the issuance of the proposed FSP, it was not known how the FASB would define “nonpublic” for purposes of the deferral of FIN 48. The proposed FSP states that entities with debt or equity securities traded in a public market and obligors for conduit debt securities traded in a public market are excluded from the definition of “nonpublic.”

Conduit debt securities are typically issued by a governmental entity, such as a local economic development authority, on behalf of another entity (the obligor). There are many other types of conduit debt securities that are common for both commercial and not-for-profit entities, including hospitals. Substantially all conduit debt securities are traded in public markets (typically in over-the-counter markets) and organizations who are obligors for conduit debt securities will likely not meet the definition of a “nonpublic” entity for the deferral FIN 48.

In addition, nonpublic entities that have already implemented FIN 48 and have issued interim financial information to third parties are not eligible for the deferral. The original effective date of FIN 48 is fiscal years beginning after December 15, 2006 (January 1, 2007 for calendar year organizations).