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Fair Value Accounting

June 29, 2010. FASB Issues Exposure Draft.

The Financial Accounting Standards Board issued

an Exposure Draft of a proposed Accounting Standards Update (ASU) addressing the use of fair value in financial reporting. The intent is to help converge US accounting standards for measuring fair value and for disclosing information about fair value measurements with International Financial Reporting Standards (IFRSs).

The ED is controversial. Critics include the American Bankers Association (ABA). The ABA has developed a website to explain its views and to help investors draft comment to the FASB. The comment deadline is Sept. 7, 2010.

Links

FASB's Exposure Draft

ABA's website with sample comment letter

May 7, 2009. EU Commission cites accounting challenges.

European Commissioner Charlie McGreevy summed up the practical challenges involved in internationalization of accounting standards in his keynote address at the “Financial Reporting in a Changing World” conference in Brussels on May 7th. His remarks focused in part on the lessons learned from the financial crisis and the future direction of accounting and financial reporting. The challenges cited by McGreevy:

• The need for accounting standard-setting to be both independent and “fully accountable.” 

• The need to overcome perceptions of a “lack of flexibility on the part of the IASB to adapt or react rapidly.”

• The notion that “accounting rules should not be seen in strict isolation from prudential rules and other reporting requirements.

EU speech

April 24, 2009. The IASB defers consideration of fair value guidance.

The IASB's delay in considering guidance similar to that issued by the FASB on April 9th highlights the practical difficulties in forming a single global set of accounting standards. The IASB issued a news release saying it will not issue further guidance at this time but will take a more comprehensive look at the accounting for financial instrument with an eye toward replacing IAS 39, Financial Instruments: Recognition and Measurement, within six months. The release also said the IASB will include relevant guidance from the FASB's FSP in an exposure draft on fair value measurement to be released in May 2009.

IASB's news release

April 9, 2009. The FASB responds.

The FASB responded to demands for more guidance on fair values and impairments. 

FASB's news release

December 30, 2008. The SEC investigates.

The SEC released a report of its findings on fair value accounting, including the effects on the quality of information available to investors and the alternatives.

SEC's report