A new standard developed by the Financial Accounting Standards Board, FAS 150, would require private, non-Securities and Exchange Commission-registered construction firms to classify mandatorily redeemable shares as a liability on their balance sheets. What!? Let us (try) to explain. First, who in the world is the Financial Accounting Standards Board (FASB), and who anointed them head cheese? The FASB describes itself thusly: ?EUR??,,????'??Since 1973, the Financial Accounting Standards Board (FASB) has been the designated organization in the private sector (emphasis added) for establishing standards of financial accounting and reporting. Those standards govern the preparation of financial reports. They are officially recognized as authoritative by the Securities and Exchange Commission ?EUR??,,????'??? and the American Institute of Certified Public Accountants. ?EUR??,,????'??? Such standards are essential to the efficient functioning of the economy because investors, creditors, auditors and others rely on credible, transparent and comparable financial information.?EUR??,,????'?? The Securities and Exchange Commission (SEC) has statutory authority to establish financial accounting and reporting standards for publicly held companies under the Securities Exchange Act of 1934, however, the SEC policy has been ?EUR??,,????'??to rely on the private sector?EUR??,,????'?? (emphasis added), in this case the FASB, for this function (as long as the FASB demonstrates the ability to ?EUR??,,????'??fulfill the responsibility in the public interest.?EUR??,,????'?? Moving on: What is this ?EUR??,,????'??mandatorily redeemable shares?EUR??,,????'?? business, and why should private construction firms be concerned? According to BDO Seidman, LLB, accountants, consultants, mandatorily redeemable shares (MRS) are ?EUR??,,????'??shares that an entity is required to redeem for cash or other assets at a fixed or determinable date or upon the occurrence of an event that is certain to occur, like the death of a particular individual, other than at the end of the entity?EUR??,,????'???s life. The key to the definition is that no uncertainty exists about the entity?EUR??,,????'???s obligation to issue assets to redeem the shares.?EUR??,,????'?? That?EUR??,,????'???s not much help, is it? Another definition of MRS is: ?EUR??,,????'??put options, forward purchase contracts, and obligations that a company can settle by simply issuing its own shares be booked as liabilities, not as equity.?EUR??,,????'?? At any rate, the Associated General Contractors of America (AGCA) strongly expressed its discontent over FAS-150 to Robert Herz, chairman of the Financial Accounting Standards Board. The AGCA asserted the new standard would have a ?EUR??,,????'??disastrous affect on the construction industry,?EUR??,,????'?? and ?EUR??,,????'??wipe out the net worth of closely held businesses in many cases.?EUR??,,????'?? David Lukens, chief operating officer for the AGCA, urged the FAS Board not to make FAS 150 applicable to private companies. Apparently bending to outside pressures from groups like the AGCA, the FAS Board on August 27 recommended to delay the implementation of FAS 150 for one year. ?EUR??,,????'??We will continue to express our concern over FAS 150 and work to make clear the ramifications of this statement on nonpublic companies could be disastrous,?EUR??,,????'?? Lukens concluded. This also gives everyone else, other that accountants, time to figure out what the heck mandatorily redeemable shares are.