FASB Issues Proposed Staff Position to Improve the Financial Reporting for Financial Instruments

Exposure document is the second of two proposed FSPs released as part of a series of short- and long-term improvements planned by the FASB

Norwalk, CT, December 24, 2008—The Financial Accounting Standards Board (FASB) today issued the second 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 FAS 107-a, Disclosures about Certain Financial Assets: An Amendment of FASB Statement No. 107, is available for review and comment by constituents until January 15, 2009. These two FSPs are proposed to be effective for 2008 year end reporting and are part of the four short-term projects announced by FASB Chairman Robert H. Herz at the December 15 th Board meeting that are intended to improve and simplify current practices for accounting for financial instruments.

Proposed FSP FAS 107-a would amend the disclosure requirements in FASB Statement No. 107, Disclosures about Fair Value of Financial Instruments, to increase the comparability of information about certain financial assets that have related economic characteristics but have different measurement attributes. The proposed FSP would apply to certain financial assets such as (a) debt securities classified as held-to-maturity and available-for-sale and (b) loans and long-term receivables that are not measured at fair value with changes in the fair value recognized through earnings.   The disclosures that would be required include (a) a comparison of common measurement attributes for financial assets and (b) the pro forma income from continuing operations (before taxes) under the different measurement scenarios.  These disclosures have been developed jointly with the International Accounting Standards Board (IASB), which recently issued an exposure draft proposing a similar set of disclosures.

Last week, the FASB released proposed FSP EITF 99-20-a, Amendments to the Impairment and Interest Income Measurement Guidance of EITF Issue No. 99-20, which is available for review and comment by constituents until December 30, 2008.   FSP EITF 99-20-a 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.

In addition to the FSPs, the FASB expects to make progress on its two remaining projects— Clarification of the Embedded Credit Derivative Scope Exception in Paragraph 14B of Statement 133 and Recoveries of Other-Than-Temporary Impairments (Reversals)—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 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.

The proposed FSPs are 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