1. 1 “Who We Are and What We Do” May 10, 2007 George J. BatavickRuss Golden Member of the BoardDirector TA&I EITF Chairman Financial Accounting Standards Board

2. 2 Disclaimer The views expressed in this presentation are our own and do not represent positions of the Financial Accounting Standards Board. Positions of the FASB are arrived at only after extensive due process and deliberations.

3. 3 Private-sector, independent accounting standard-setter – Not part of the SEC or any other organization such as PCAOB – Board members from various backgrounds selected by Trustees of Financial Accounting Foundation (an independent organization) – Board Members are full time and not affiliated with any other organization. Extensive due process for all guidance it issues whether Statements, Interpretations, FSPs, EITFs or DIGs. Accounting standards identify what information a company is to provide to the capital markets and other users of financial information and how that communication is to be done. FASB

4. 4 OUR MISSION: Establish and improve standards of financial accounting and reporting OUR ACTIONS: Improve the usefulness of financial reporting Keep standards current Consider promptly any significant areas of deficiency Promote international convergence Improve understanding of information in financial reports FASB

5. 5 Board (7) FASB Board (7) The Organization Director Major Projects Director Major Projects Director Policy and Admin Director Policy and Admin Director Implementation (EITF Chair) Director Implementation (EITF Chair) FASB Staff: Project managers & other technical staff (33) Practice & industry fellows (11) Post-graduate technical assistants (11) Support staff (11) Washington DC representative

6. 6 FASB’s Constituents Investors, banks, other creditors, and other users of general purpose financial statements Preparers of financial statements Auditors SEC, PCAOB, Bank regulators, etc. Educators

7. 7 FASB’s Advisory Bodies Financial Accounting Standards Advisory Council (FASAC) – 30+ members, meet quarterly User Advisory Council (UAC) – 35+ members, meet semiannually Small Business Advisory Committee (SBAC) – 20+ members, meet semiannually Investors Technical Advisory Committee (ITAC) – 12 members, meet periodically Private Company Financial Reporting Committee

8. 8 How We Operate Open decision-making process—sunshine All technical discussions held in public meetings – Education sessions – Board meetings – Simple majority voting requirement (4:3) Private meetings to discuss technical issues limited to 3 Board members Extensive due process before issuing final document Standards are to be “neutral”

9. 9 FASB Agenda Setting— An Open Process Letters from interested parties Formal input on agenda priorities: – FASAC, UAC, SBAC, ITAC – SEC and PCAOB – Other constituents we meet with regularly Examples: Bank regulators, trade associations EITF, AICPA Technical inquiries International activity Agenda requests typically considered semiannually

10. 10 Agenda Decision Criteria Pervasiveness of the problem Alternative solutions Technical feasibility Practical consequences Convergence possibilities Cooperative opportunities Resources

11. 11 Development of an Accounting Standard—Open Due Process Pre-agenda research by FASB staff – May issue document to gain constituent feedback Formal agenda request presented to Board Project Resource Group established Education sessions Tentative decisions reached at open Board meetings – Field visits, field testing are options Tentative Board decisions communicated on website – May issue Preliminary Views document Redeliberation Exposure Draft issued reflecting tentative decisions – Comment letter analysis – Public roundtable meetings Redeliberation Standard issued with full consideration of constituent input

12. 12 Consideration of Costs and Benefits and Operationality Qualitative cost-benefit analysis: – Will a standard sufficiently improve financial reporting to justify the costs it will impose on the financial reporting system as a whole? – Benefits: primarily go to users of financial statements Costs: borne primarily by preparers and auditors Standard is operational if: – A provision/standard is comprehensible by a reader who has a reasonable level of knowledge and sophistication – The information needed to apply the provision/standard is currently available or can be created – The provision/standard can be applied in the manner in which it was intended.

13. 13 Joint FASB/IASB Projects Conceptual Framework Standards Projects – Business Combinations – Financial Instruments: Liabilities and Equity – Financial Statement Presentation – Leases – Revenue Recognition – Earnings per Share – Income Taxes – Research and Development Research Projects – Insurance Contracts – Financial Instruments

14. 14 FASB Projects Standards Projects – Mergers and Acquisitions for a Not-for-Profit Organization – Postretirement Benefit Obligations including Pensions – Derivatives Disclosures – Fair Value Option (Phase 2) – Financial Guarantee Insurance – GAAP Hierarchy – Subsequent Events Implementation Projects – Statement 140—Transfers of Financial Assets – Insurance Risk Transfer – Loan Disclosures – Emission Allowances FASB Staff Positions (13)

15. 15 Codification and Retrieval Project OBJECTIVES: Develop a single, authoritative, timely, comprehensive, integrated codification of all relevant U.S. accounting and financial reporting literature Develop a single, fully functional, online, real-time database with easy retrievability PROGRESS TO DATE: Software developed Master index complete Mappers of existing literature engaged Authoring in progress Internal and external reviews to begin in 2Q 2007

16. 16 Private Company and Small Public Company Initiatives Formation of SBAC Representation on Advisory Committees, Resource Groups, and EITF Participation in liaison meetings Process changes Staffing enhancements Formation of Private Company Financial Reporting Committee