2007 Annual Report - Sappi

36. New United States accounting standards
In June 2006, the FASB issued Interpretation No. 48 (“FIN No. 48”), Accounting for Uncertainty in Income Taxes – an
interpretation of FASB Statement No. 109, which clarifies the accounting for uncertainty in income taxes recognised in an
enterprise’s financial statements in accordance with SFAS No. 109, Accounting for Income Taxes. The Interpretation provides
a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position
taken or expected to be taken in a tax return. Under FIN No. 48, the company may recognise the tax benefit from an uncertain
tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities,
based on the technical merits of the position. The tax benefits recognised in the financial statements from such a position
should be measured based on the largest benefit that has a greater than 50% likelihood of being realised upon ultimate
settlement. FIN No. 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim
periods, disclosure, and transition. FIN No. 48 is effective for us beginning 1 October 2007. We are currently evaluating the
provisions of FIN 48 and have not yet completed our determination of the impact of adoption on our financial position or results
of operations.
In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements, which defines fair value, establishes a
framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value
measurements. SFAS No. 157 does not require any new fair value measurements, but provides guidance on how to measure
fair value by providing a fair value hierarchy used to classify the source of the information. This statement is effective for us
beginning October 2008. We currently are assessing the potential impact that adoption of SFAS No. 157 would have on our
financial statements.
In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities. SFAS
No. 159 gives us the irrevocable option to carry many financial assets and liabilities at fair values, with changes in fair value
recognised in earnings. SFAS No. 159 is effective for us beginning October 2008, although early adoption is permitted. We
are currently assessing the potential impact that adoption of SFAS No. 159 will have on our financial statements.
On 15 November 2007, the Securities and Exchange Comission (SEC) approved rule amendments under which financial
statements from foreign private issuers in the United States of America (USA) will be accepted without reconciliation to US
Generally Accepted Accounting Principles if they are prepared using International Financial Reporting Standards (IFRS) as
issued by the International Accounting Standards Board. The rule amendments will be applicable to Sappi’s 2008 financial
year as they apply to years ended after 15 November 2007.
sappi limited | 07 | annual report 169