FASB Issues First of Two Proposed Staff Positions to Improve the Financial Reporting for Financial Instruments

Exposure documents are first steps in a series of short- and long-term improvements planned by the FASB

Norwalk, CT, December 19, 2008—The Financial Accounting Standards Board (FASB) today issued the first of two proposed FASB Staff Positions (FSPs) intended to address concerns arising from the current financial crisis relating to accounting for financial instruments. Proposed FSP EITF 99-20-a, Amendments to the Impairment and Interest Income Measurement Guidance of EITF Issue No. 99-20, is available for review and comment by constituents until December 30, 2008. Additionally, proposed FSP FAS 107-a, Disclosures about Certain Financial Instruments, will be issued in the following week and constituents have until January 15, 2009 to review and provide comments.

The proposed FSPs represent two of four short-term projects announced by FASB Chairman Robert H. Herz at the December 15th Board meeting that are intended to improve and simplify current practices for accounting for financial instruments. Progress on the remaining projects—Clarification of the Embedded Credit Derivative Scope Exception in Paragraph 14B of Statement 133 and Recoveries of Other-Than-Temporary Impairments (Reversals)—will be made in the coming weeks. In addition to these short-term efforts, Mr. Herz announced that the Board added to its technical agenda a comprehensive joint project with the International Accounting Standards Board (IASB) to address the complexity in existing standards of accounting and reporting for financial instruments. These actions were determined by the Board following extensive input received during the recent roundtables on the global financial crisis held with the IASB, and other input and discussions with constituents.

“Regaining investor confidence during this global credit crisis requires both immediate action and a plan for long-term improvement in the accounting for financial instruments,” said Mr. Herz. “By issuing these proposed FSPs, the FASB is taking immediate steps to reduce complexity and make the accounting for these instruments easier to understand.”

Proposed FSP EITF 99-20-a would amend the impairment guidance in EITF Issue No. 99-20, Recognition of Interest Income and Impairment on Purchased Beneficial Interests and Beneficial Interests That Continue to Be Held by a Transferor in Securitized Financial Assets. It is intended to reduce complexity and thus achieve more consistent determinations of whether other-than-temporary impairments of available-for-sale or held-to-maturity debt securities have occurred. Proposed FSP FAS 107-a would amend the disclosure requirements in FASB Statement No. 107, Disclosures about Certain Financial Instruments, to increase the comparability of certain financial instruments that are economically similar but have different measurement attributes.

The proposed FSP is available for review at

About the Financial Accounting Standards Board

Since 1973, the Financial Accounting Standards Board has been the designated organization in the private sector for establishing standards of financial accounting and reporting. Those standards govern the preparation of financial reports and are officially recognized as authoritative by the Securities and Exchange Commission and the American Institute of Certified Public Accountants. 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. For more information about the FASB, visit our website at