09/30/09 -- FASB's ASU No. 2009-09 Corrects Error in Stock-Based
Compensation Guidance
As discussed in the article entitled "ASU No. 2009-09 Corrects Error in
Stock-Based Compensation Guidance" in the September 22, 2009, issue of
Accounting & Compliance Alert, the FASB issued Accounting Standards Update
(ASU) No. 2009-09, Accounting for Investments-Equity Method and Joint
Ventures and Accounting for Equity-Based Payments to Non-Employees-Amendments
to Sections 323-10-S99 and 505-50-S99, to correct two references to stock
payments to non-employees in the SEC section of the Accounting Standards
Codification.
The FASB said FASB ASC 323-10-S99-4, Topic 323, Investments-Equity Method
and Joint Ventures, was originally entered incorrectly into the Codification,
and the mistake was corrected by amending the paragraph with no link transition.
The text in FASB ASC 323-10-S99-4 includes an SEC staff observer comment
from a meeting of the FASB's Emerging Issues Task Force (EITF), titled
Accounting by an Investor for Stock-Based Compensation Granted to Employees
of an Equity Method Investee. ASU No. 2009-09 also adds an SEC staff comment
to an EITF issue for Accounting Recognition for Certain Transactions Involving
Equity Instruments Granted to Other Than Employees. According to ASU No.
2009-09, investors that are SEC registrants should classify any income
or expense resulting from application of the guidance in the same income
statement caption as the equity in earnings or losses of the investee.
The ASU said public companies can expect the SEC's staff to challenge
the accounting by the issuer or recipient of the stock or options in transactions
involving equity instruments granted to non-employees under FASB ASC 505-50-25-2,
Topic 505, Investments-Equity Method and Joint Ventures, if the accounting
does not reflect the same commitment date or similar values.
09/29/09 -- FASB's Technical Revisions for Per Share Earnings Calculations
Provided in ASU No. 2009-08
As discussed in the article entitled "Technical Revisions for Per Share
Earnings Calculations Provided in ASU No. 2009-08" in the September 22,
2009, issue of Accounting & Compliance Alert, the FASB recently
issued Accounting Standards Update (ASU) No. 2009-08, Earnings Per
Share--Amendments to Section 260-10-S99, to reflect SEC staff pronouncements
on earnings per share calculations.
The amendments consist of technical corrections to FASB ASC 260-10-S99,
in Topic 260, Earnings Per Share, which is based upon Emerging
Issues Task Force (EITF) Topic D-53, "Computation of Earnings per Share
for a Period That Includes a Redemption or an Induced Conversion of a
Portion of a Class of Preferred Stock," and Topic D-42, "The Effect on
the Calculation of Earnings per Share for the Redemption or Induced Conversion
of Preferred Stock," (FASB ASC 260-10-S55) and (FASB ASC 260-10-S99).
With the changes, 21 paragraphs have been deleted from FASB ASC 260-10-S99,
while new text has been added. The added text includes a definition of
the scope of the SEC staff pronouncement.
According to ASU No. 2009-08, the SEC staff believes that when a public
company redeems preferred shares, the difference between the fair value
of the consideration transferred to the holders of the preferred stock
and the carrying amount on the balance sheet after issuance costs of the
preferred stock should be added to or subtracted from net income before
doing an earnings per share calculation.
The SEC's staff also thinks it is not appropriate to aggregate preferred
shares with different dividend yields when trying to determine whether
the "if-converted" method is dilutive to the earnings per-share calculation,
the FASB said in ASU No. 2009-08.
09/28/09 -- FASB's Differences with IASB on Financial Instruments
Continue to Widen
As discussed in the article entitled "FASB's Differences with IASB on
Financial Instruments Continue to Widen" in the September 25, 2009, issue
of Accounting & Compliance Alert, the FASB agreed on a tentative
approach to remeasuring core deposits in its financial instruments project
during its September 23 weekly meeting in Norwalk, CT.
Core deposits are at the heart of the business of retail banks. Retail
banks raise their funds from core deposits, which consist of savings and
checking accounts.
During prior meetings on the topic, FASB members discussed recommendations
from various investors who said that core deposits are a source of cheap
and stable funding, and that this value should be reflected in the financial
statements. They have also said that the underlying inputs and assumptions
used by management to estimate a core deposit portfolio need to be transparent.
At the meeting, the FASB discussed how to value core deposits, including
how to remeasure them, but quickly moved to the convergence aspect of
the project, even before any possible decisions were discussed.
09/25/09 -- FASB’s ASU No. 2009-07 Adds Some Technical Corrections
to SEC Sections in Codification
As discussed in the article entitled "ASU No. 2009-07 Adds Some Technical
Corrections to SEC Sections in Codification" in the September 22, 2009,
issue of Accounting & Compliance Alert, the FASB recently amended
33 paragraphs in the SEC section of the Codification of U.S. GAAP with
the issuance of Accounting Standards Update (ASU) No. 2009-07, Accounting
for Various Topics—Technical Corrections to SEC Paragraphs.
The most significant amendments consist of changes to:
- FASB ASC 605-15-S99-1 in Topic 605, Revenue Recognition, which
now includes the text of SEC Interpretative Release No. 33-8642, Commission
Guidance Regarding Accounting for Sales of Vaccines and Bioterror Countermeasures
to the Federal Government for Placement into the Pediatric Vaccine Stockpile
or the Strategic National Stockpile;
- FASB ASC 410-30-S35-1 in Topic 410, Asset Retirement and Environmental
Obligations, which has added the heading “Appropriate Discount Rate
to Be Applied to a Produce or Environmental Remediation Liability;
- FASB ASC 450-20-S99-1 in Topic 450, Contingencies, which has had the
text of SEC Staff Accounting Bulletin (SAB) Topic 5.Y Accounting
and Disclosures Related to Loss Contingencies, added to it;
- FASB ASC 810-10-S99-4 in Topic 810, Consolidation, which now
includes the text of Rule 3A-04 of Regulation S-X, "Intercompany Items
and Transactions"; and
- FASB ASC 323-740-S99-1 in Topic 323, Investments—Equity Method
and Joint Ventures, which now includes the text of SAB Topic 6.I.2
Taxes of Investee Company.
The other 28 amendments are relatively minor changes to wording and the
replacement of some text references to old U.S. GAAP standards with citations
to the Codification.
09/17/09 -- FASB's Proposed ASU Would Revise Oil and Gas Industry
Rules in Topic 932
As discussed in the article entitled "Proposed ASU Would Revise Oil and
Gas Industry Rules in Topic 932" in the September 16, 2009, issue of Accounting
& Compliance Alert, the FASB recently issued a Proposed Accounting
Standards Update (ASU), Extractive Industries-Oil and Gas, (Topic
932), to match the guidance in U.S. GAAP with the changes the SEC made
in December 2008 when it published Release No. 33-8995, Modernization
of Oil and Gas Reporting.
The proposal is out for comment until October 15.
The proposed changes were approved by the FASB at an August 5 meeting.
If the draft guidance becomes final, it will be effective for fiscal years
that end on or after December 31, 2009.
One of the main changes in the proposal would be an expansion of the
definition of oil- and gas-producing activities to include the extraction
of hydrocarbons from oil sands, shale beds, and other areas that were
not open to energy production in the 1970s when the SEC's previous reporting
requirements for energy companies were written.
The Proposed ASU would also amend the definition of proved gas reserves
to require companies to use a 12-month average instead of a year-end price.
The draft guidance also calls for energy companies to make separate disclosures
about their reserves that represent 15% or more of their proved reserves.
09/10/09 -- FASB Webcast Scheduled to Explain Changes to Not-For-Profit
Merger Guidance
As discussed in the article entitled "FASB Webcast Scheduled to Explain
Changes to Not-For-Profit Merger Guidance" in the September 9, 2009, issue
of Accounting & Compliance Alert, the FASB said it plans to hold
a one-hour webcast September 18 to give statement preparers, auditors,
and investors an update about the changes caused by the May issuance of
SFAS No. 164, Not-for-Profit Entities: Mergers and Acquisitions.
FASB member Lawrence Smith is scheduled to moderate the panel discussion,
which will also include Ronald Bossio, a senior project manager, who directed
the effort that produced SFAS No. 164. The statement amended the accounting
literature for business combinations between two or more not-for-profit
entities.
The other participants in the webcast are scheduled to be Martha Garner,
a managing director with PricewaterhouseCoopers LLP, and Cheryl Olson,
director of council financial consulting for Girl Scouts of the USA, the
FASB. Garner has worked closely with not-for-profit entities and was a
member of an AICPA task force that addressed the application of SFAS No.
157, Fair Value Measurements, (FASB ASC 820) by not-for-profits.
The FASB said it scheduled the webcast to help accounting practitioners
understand the key provisions of SFAS No. 164, particularly if they are
working for an entity that is contemplating or currently negotiating a
merger or acquisition.
09/08/09 -- FASB's ASU No. 2009-06 Lets Private Entities Avoid Some
Tax Disclosures
As discussed in the article entitled "ASU No. 2009-06 Lets Private Entities
Avoid Some Tax Disclosures" in the September 4, 2009, issue of Accounting
& Compliance Alert, the FASB recently issued Accounting Standards
Update (ASU) No. 2009-06, Income Taxes (Topic 740)-Implementation Guidance
on Accounting for Uncertainty in Income Taxes and Disclosure Amendments
for Nonpublic Entities.
The amendments to U.S. GAAP in ASU No. 2009-06 exempt private companies
from the requirements of FASB ASC 740-10-50-15(a), which calls for the
provision of a tabular reconciliation of the total amounts of unrecognized
tax benefits at the beginning and end of a period. Private companies are
also exempted from FASB ASC 740-10-50-15(b), which calls for disclosure
of the total amount of unrecognized tax benefits that, if recognized,
would affect the effective tax rate.
Private companies would remain subject to other required disclosures
under FASB ASC 740-10-50-15(c), such as the provision of the total amount
of interest and penalties recognized in the statement of operations and
the total amount of interest and penalties recognized on the balance sheet.
Private entities also still have to follow FASB ASC 740-10-50-15(d),
which requires disclosure of:
- The nature of the uncertainty,
- The nature of the event that could occur in the next 12 months that
would cause the change, and
- An estimate of the range of the reasonably possible change or a statement
that an estimate of the range cannot be made.
09/04/09 -- FASB's Proposed ASU Offers Amendments to Consolidation
Guidance in FASB ASC 810
As discussed in the article entitled "Proposed ASU Offers Amendments to
Consolidation Guidance in FASB ASC 810" in the September 1, 2009, issue
of Accounting & Compliance Alert, the FASB recently issued a proposal
to address concerns accounting practitioners had regarding some inconsistencies
between the guidance in FASB ASC 810-10 and elsewhere in U.S. GAAP.
The Proposed Accounting Standards Update (ASU), Consolidation: Accounting
and Reporting for Decreases in Ownership of a Subsidiary--a Scope
Clarification, (Topic 810), would affect the accounting and financial
reporting involving a decrease in ownership in a business or nonprofit
activity, the FASB said. The proposal would also affect accounting and
reporting by an entity that exchanges a group of assets that constitute
a business or nonprofit activity for an equity interest in another entity.
Comments on the proposal are due September 28.
Entities that have adopted SFAS No. 160, Noncontrolling Interests
in Consolidated Financial Statements, (FASB ASC 810-10-65), but applied
it in a manner that differs from the method offered in the proposal, would
be affected if the draft guidance is issued by the FASB as a Final ASU.
09/03/09- FASB's ASU No. 2009-04 Amends Codification's Section on
SEC's ASR No. 268
As discussed in the article entitled “ASU No. 2009-04 Amends Codification's
Section on SEC's ASR No. 268” in the September 1, 2009, issue of Accounting
& Compliance Alert, the FASB recently issued Accounting Standards
Update (ASU) No. 2009-04, Accounting for Redeemable Equity Instruments.
The ASU supersedes FASB ASC 480-10-S99-3 and replaces it with FASB ASC
480-10-S99-3A. The amendment provides the SEC staff's views regarding
the application of Accounting Series Release (ASR) No. 268, Presentation
in Financial Statements of “Redeemable Preferred Stocks.”
ASR No. 268 requires preferred securities that are redeemable for cash
or other assets to be classified outside of permanent equity if they are
redeemable (1) at a fixed or determinable price on a fixed or determinable
date, (2) at the option of the holder, or (3) upon the occurrence of an
event that is not solely within the control of the issuer.
According to ASU No. 2009-04, the SEC staff believes ASR No. 268 provides
analogous guidance for other redeemable equity instruments, including,
for example, common stock, derivative instruments, noncontrolling interests,
securities held by an employee plan, and share-based payment arrangements
with employees.
09/02/09 -- FASB's ASU No. 2009-05 Addresses Application of Fair Value
Measurements to Liabilities
As discussed in the article entitled "ASU No. 2009-05 Addresses Application
of Fair Value Measurements to Liabilities" in the September 1, 2009, issue
of Accounting & Compliance Alert, the FASB recently issued Accounting
Standards Update (ASU) No. 2009-05, Fair Value Measurement and Disclosures:
Measuring Liabilities at Fair Value, (FASB ASC 820-10).
ASU No. 2009-05 is effective for the first reporting period beginning
after issuance. The guidance provides clarification on measuring liabilities
at fair value when a quoted price in an active market is not available.
In such circumstances, the ASU specifies that a valuation technique should
be applied that uses either the quote of the liability when traded as
an asset, the quoted prices for similar liabilities or similar liabilities
when traded as assets, or another valuation technique consistent with
existing fair value measurement guidance.
Examples of the alternative valuation methods include using a present
value technique or a market approach, which is based on the amount at
the measurement date that the reporting entity would pay to transfer the
identical liability or would receive to enter into the identical liability.
The guidance also states that when estimating the fair value of a liability,
a reporting entity is not required to include a separate input or adjustments
to other inputs relating to the existence of a restriction that prevents
the transfer of the liability.
09/01/09 -- FASB Releases Proposed Guidance on Fair Value Disclosures
As discussed in the article entitled "Proposed Guidance on Fair Value
Disclosures Released" in the August 31, 2009, issue of Accounting &
Compliance Alert, the FASB recently issued proposed guidance intended
to improve disclosures about fair value measurements.
The proposed Accounting Standards Update (ASU), Fair Value Measurements
and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements,
was issued in response to input received from users of financial statements.
Many investors are concerned about fair value measurements that use significant
unobservable inputs, also known as Level 3 inputs.
The proposed ASU would affect all entities that are required to make
disclosures about recurring and nonrecurring fair value measurements.
The deadline for comments is October 12, 2009.
08/31/09 -- FASB Continues to Struggle With Liabilities and Equity
Project
As discussed in the article entitled "Board Continues to Struggle With
Liabilities and Equity Project" in the August 28, 2009, issue of Accounting
& Compliance Alert, the FASB agreed to continue forward with its current
strategy for its project to differentiate between liabilities and equity
for financial instruments, when it met for its weekly meeting on August
27 in Norwalk, CT.
Board members agreed that the tentative classification decisions it has
made on how to treat financial instruments with characteristics of both
equity and liabilities should stand, and decided not to begin anew on
its project. For this project, the board had issued Preliminary Views
(PV) No. 1550-100, Financial Instruments with Characteristics of Equity,
in November 2007.
At the August 27 meeting, board members discussed the merits and shortcomings
of what is known as the subordination-redemption approach. Under this
approach, all claims against an entity must eventually be satisfied, but
equity interests as a group would be considered the most subordinated
claims against an entity.
Much of the discussion revolved around hammering out definitions and
determining the details of when bifurcation would be allowed. At one point
a staff member asked if the project should be started over again, but
the board disagreed, and praised the progress made to date.
08/28/09 -- Nusbaum and Viceira to Join FAF Board of Trustees
As discussed in the article entitled "Nusbaum and Viceira to Join FAF
Board of Trustees" in the August 27, 2009, issue of Accounting & Compliance
Alert, the Financial Accounting Foundation recently said it will add
two new members to its board of trustees.
Edward Nusbaum and Luis Viceira will join the 17 other members of FAF,
which oversees the FASB and the GASB. FAF Chairman John Brennan praised
the new appointees for bringing invaluable experience to the board.
"Ed Nusbaum and Luis Viceira bring a broad spectrum of business, accounting,
and capital markets knowledge and experience to the FAF Board of Trustees,"
said Brennan. "On behalf of the Trustees, I am pleased to welcome these
highly distinguished professionals to the Board as they embrace the important
mission of the Foundation and its standard-setting boards."
Nusbaum is currently the CEO and executive partner of Grant Thornton
LLP and was recently named chief executive officer of Grant Thornton International
Ltd.
Viceira is currently a professor at the Harvard Business School, where
he teaches investment management and capital markets in the MBA and doctoral
programs. He specializes on the analysis of asset allocation strategies
for long-term investors.
08/27/09 -- FASB Issues Third Accounting Standard Update to Amend
Several Topics Containing SABs
As discussed in the article entitled "FASB Issues Third Accounting Standard
Update to Amend Several Topics Containing SABs" in the August 26, 2009,
issue of Accounting & Compliance Alert, the FASB issued its third
Accounting Standard Update on August 24.
Accounting Standard Update (ASU) No. 2009-03, SEC Update: Amendments
to Various Topics Containing SEC Staff Accounting Bulletins, was issued
to make technical corrections to various topics containing SEC Staff Accounting
Bulletins (SABs) to update cross-references to Codification text.
Amendments were made to Codification Topics containing the following
SABs:
- SAB Topic 5.0, Research and Development Arrangements;
- SAB Topic 5.T, Accounting for Expenses or Liabilities Paid by Principal
Stockholder;
- SAB Topic 6.L, Financial Reporting Release 28--Accounting for Loan
Losses by Registrants Engaged in Lending Activities;
- SAB Topic 8.A, Sales of Leased or Licensed Departments;
- SAB Topic 10.F, Presentation of Liabilities for Environmental Costs;
- SAB Topic 12.A, Accounting Series Release 257--Requirements for
Financial Accounting and Reporting Practices for Oil and Gas Producing
Activities;
- SAB Topic 12.D, Application of Full Cost Method of Accounting;
- SAB Topic 13, Revenue Recognition; and
- SAB Topic 14, Share-Based Payment.
08/26/09 -- FASB Explains New Guidance on the Transfer and Consolidation
of Financial Instruments
As discussed in the article entitled "Practitioners Asking for Further
Clarifications on New Consolidation Rules" in the August 25, 2009, issue
of Accounting & Compliance Alert, the FASB held a webcast to
explain in further detail what the new accounting rules on the transfer
and consolidation of financial instruments will mean for practitioners,
emphasizing that more consolidations will likely be required.
During the August 24 webcast, Board member Thomas Linsmeier and FASB
staff members Patricia Donoghue and Chris Roberge discussed the practical
implementation issues surrounding SFAS No. 166, Transfers of Financial
Assets: an Amendment to FASB Statement 140, (FASB ASC 860) and SFAS
No. 167, Amendments to FASB Interpretation 46(R), (FASB ASC 810).
SFAS No. 166 removed the concept of a qualifying special purpose entity
and clarified application of the conditions for the surrender of control
over transferred financial assets, as well as adding some additional disclosure
requirements.
SFAS No. 167 replaced a quantitative with a qualitative approach for
determining who the primary beneficiary would be and whether consolidation
would be required. SFAS No. 167 additionally required additional information
about an enterprise’s involvement with variable interest entities (VIE)
and additional disclosures.
Both SFAS No. 166 and SFAS No. 167 will become effective as of the beginning
of each reporting entity’s first annual reporting period beginning after
November 15, 2009.
08/24/09 -- FASB's Loss Contingency Project Will Stress Exposures
from Lawsuits
As discussed in the article entitled "Loss Contingency Project Will Stress
Exposures from Lawsuits" in the August 21, 2009, issue of Accounting
& Compliance Alert, the FASB recently laid out several broad principles
for the next stage of the loss contingency project, agreeing that the
initial focus should be on exposures related to lawsuits and that the
project's objective should call for disclosures about the qualitative
and quantitative information about the loss contingency.
The FASB members want to give investors a better understanding of the
nature of the contingency, its potential timing, and possible size.
The loss contingency project extended from the June 2008 issuance of
Exposure Draft (ED) No. 1600-100, Disclosure of Certain Loss Contingencies,
which proposes amendments to SFAS No. 5, Accounting for Contingencies,
(FASB ASC 450). By the time the comment period closed in August 2008,
the FASB received more than 240 comment letters.
The loss contingency project is one of the more controversial topics
on the standard-setting agenda, and the FASB members decided to redeliberate
ED No. 1600-100 to ensure that all the interested parties are given an
opportunity to take part in the debate. The staff anticipates that this
process will require two to three additional board meetings.
The board decided not to rule out the possibility that the guidance could
be effective for fiscal years ending after December 15, 2009, but fell
short of supporting the staff proposal that the proposed effective date
be no sooner than for fiscal years ending after December 15, 2010.
08/18/09 -- FASB's Financial Instruments Project Stresses Changes
in Net Income
As discussed in the article entitled "Financial Instruments Project Stresses
Changes in Net Income" in the August 17, 2009, issue of Accounting
& Compliance Alert, if the FASB has its way, financial company shareholders
will get detailed information about how changes in the market value of
a company's securities and loan portfolios are affecting net income.
The decisions the members of the standard-setter for U.S. GAAP reached
at their August 13, weekly meeting in Norwalk, CT, called for several
new requirements on the financial statements of financial companies.
One requirement calls for the separate presentation on the income statement
of the aggregate amount for unrealized and realized gains or losses. Board
members also decided that there should be a separate presentation for
interest accruals and credit losses.
The FASB members also agreed that entities would be permitted to report
interest accruals or credit losses as separate line items on the income
statement, but that such a report would not be required.
08/17/09 -- FASB Fine Tunes Approach for Presentation of Fair Value
Measurements
As discussed in the article entitled "Board Fine Tunes Approach for Presentation
of Fair Value Measurements" in the August 14, 2009, issue of Accounting
& Compliance Alert, FASB members have decided to back a recommendation
from their research staff.
The staff recommended that changes in fair value that are recognized
in net income would require presentation of only the fair value on the
balance sheet. A possible disclosure of the instrument's value at amortized
cost and a reconciliation to fair value could be made in the notes to
the financial statements.
The decision, reached at the FASB's August 13 weekly meeting at its Norwalk,
CT, headquarters, represented another milestone in the landmark project
on financial instruments accounting.
The FASB has had several discussions on financial instruments to date.
On July 15, the board decided that all financial instruments will be presented
on the balance sheet at fair value, with changes in value recognized in
net income or other comprehensive income (OCI), with an optional exception
for an issuer's own debt in certain circumstances.
FASB Chairman Bob Herz also took the opportunity to outline the progress
of the financial instruments project and its future timetable. Herz said
that he anticipated that an exposure draft would be issued at the end
of this year or early next year, and that the guidance most likely would
not become effective before 2011.
08/13/09 -- FASB Supports Use of Net Asset Value for Some Hedge Fund
Holdings
As discussed in the article entitled "Board Supports Use of Net Asset
Value for Some Hedge Fund Holdings" in the August 11, 2009, issue of Accounting
& Compliance Alert, the FASB agreed to a practical expedient for calculating
fair values for alternative investments, deciding that it was acceptable
to substitute net asset value per share in place of an independent determination
of fair value measurements.
The decision the board reached during its August 5 weekly meeting at
its Norwalk, CT headquarters came as it was considering Proposed FASB
Staff Position (FSP) No. FAS 157-g, Estimating the Fair Value of Investments
in Investment Companies That Have Calculated Net Asset Value per Share
in Accordance with the AICPA Audit and Accounting Guide, Investment Companies.
The AICPA guide permits alternate investment companies to use net asset
value per share in estimating fair values of their holdings, and board
members agreed that this practical expedient should be continued.
The guidance will be published as an Accounting Standards Update, the
form all final guidance under U.S. GAAP follows since the adoption by
the FASB of its Accounting Standards Codification. The standard will be
effective for periods ending after December 15, 2009, and early adoption
will be permitted.
08/11/09 -- FASB's Financial Instruments Project Slated to Move Ahead
As discussed in the article entitled "Financial Instruments Project Slated
to Move Ahead" in the August 10, 2009, issue of Accounting & Compliance
Alert, as the FASB prepares to address its high-profile financial
instruments project when it gathers for its August 13 weekly meeting at
its Norwalk, CT, headquarters, it's become clear that every decision the
FASB and IASB make on this project is going to be harshly scrutinized.
The banking trade group that was behind much of the political pressure
that pushed the standard-setters to loosen the guidance for fair value
measurements and asset impairments sent an unsolicited comment letter
on August 4 saying it was "deeply concerned" with the direction taken
in the latest version of the proposal.
"It is surprising that the IASB and FASB would both establish new accounting
models that expand the use and prominence of mark-to-market rather than
either reduce it or at least maintain the current level," wrote Donna
Fisher, the senior vice president for tax, accounting and financial management
with the American Bankers Association. "Both boards' tentative decisions
emphasize MTM to an extreme, which would imply to users that the business
model of financial institutions is based on fair value. Because the entity's
results will be measured based on fair values, banking institutions will
be expected to perform based on MTM."
When the FASB met July 15, it decided that all financial instruments
would be presented on the balance sheet at fair value with changes in
value recognized in net income or other comprehensive income. Board members
agreed that for those financial instruments whose change in value is recognized
in OCI, the amortized cost of the instrument would be displayed on the
balance sheet and there would be a fair value adjustment.
The FASB discussed that decision with the IASB when the two boards met
in London a week later.
08/06/09 -- SEC, FASB Are Under Gun to Commit to IFRS
As discussed in the article entitled "SEC, FASB Are Under Gun to Commit
to IFRS" in the August 5, 2009, issue of Accounting &
Compliance Alert, the worldwide advance of IFRS is at a breaking point.
If SEC and FASB officials fail to make a clear commitment to the international
rules in the next two years, more than U.S. adoption of IFRS
will be at stake--the convergence of U.S. GAAP with
IFRS will essentially stop before it's ever completed.
"It will be impossible to continue this after 2011," said IASB
Chairman Sir David Tweedie, referring to the joint effort in the
FASB-IASB Memorandum of Understanding.
The IASB chief's warning is a reaction to the mounting political pressure
on both boards and the festering resentment toward the U.S. in
many of the 117 countries that have adopted IFRS.
"We get a lot of criticism of the favored nation status accorded the
U.S.," said Sir David, referring to the four of 16
seats on the IASB reserved for U.S. members, the five
of 22 trustee posts the U.S. has on the IASB's
parent, the International Accounting Standards Committee Foundation,
and the presence of SEC Chairman Mary Schapiro as one of
five members of the IASCF Monitoring Board.
Sir David issued his warning during an August 4 address
to the American Accounting Association's annual meeting in New York. It
came a day after a senior SEC official said there is growing concern at
the agency about the proliferating regional interpretations of IFRS.
"If the SEC comes out and says we're never going to accept IFRS, then
there will obviously be repercussions worldwide," Sir David
said. "Then the argument will be: why should you get involved with them?
And that's going to be difficult for us to handle."
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