Justin Roberts

On February 24, 2010, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2010-09, Subsequent Event – Amendments to Certain Recognition and Disclosure Requirements. Some of the amendments included in the ASU are effective upon issuance and will affect financial statements currently being prepared.

The ASU establishes separate subsequent event recognition criteria and disclosure requirements for U.S. Securities and Exchange Commission (SEC) filers, conduit debt obligors and other entities.


SEC Filers

Effective immediately, the financial statements of SEC filers will no longer disclose either the date through which subsequent events were reviewed or that subsequent events were evaluated through the date financial statements were issued. The requirement to evaluate subsequent events through the date of issuance is still in place. Only the disclosure is affected.

The ASU also removes the requirement to make those disclosures in financial statements revised for either a correction of an error or a retrospective application of an accounting change.

SEC filers are defined in the update as entities required to file or to furnish their financial statements with either the SEC or another appropriate agency (such as the Federal Deposit Insurance Corporation or Office of Thrift Supervision) under Section 12(i) of the Securities and Exchange Act of 1934, as amended. This definition does not encompass conduit debt obligors.

Conduit Debt Obligors

The ASU clarifies conduit debt obligors of debt traded in a public market are public entities. Therefore, these entities should evaluate subsequent events through the date the financial statements are issued rather than the date the financial statements are available to be issued. This provision is mandatory for interim and annual periods beginning after June 15, 2010. Although not stated in the ASU, conduit debt obligors are encouraged to adopt this provision early. If this is a change from current practice, the corresponding disclosures will not need to be applied retroactively.

Entities Other Than SEC Filers & Conduit Debt Obligors That Are Public Entities

Effective immediately, entities other than SEC filers and conduit debt obligors that are public entities will evaluate subsequent events through the date financial statements are available to be issued regardless of how widely their financial statements are distributed. The ASU makes no changes to the recognition and disclosure requirements from previous guidance.