FASB Major Initiatives

Fair value guidance faces sharp criticism

FASB issued additional fair value guidance amidst an economic crisis that has caused some to call for a suspension of fair value, including bank lobbyists, trade groups, lawmakers, and even the Bush Administration. The example provided in FASB’s guidance has not appeased its critics. FASB received more than 50 comment letters at this time with many voicing their serious concerns for the accounting standard.

SEC begins study on mark-to-market accounting

The SEC has begun a study on mark-to-market accounting, which is required under the Emergency Economic Stabilization Act of 2008. Mark to market accounting, more commonly known as fair value, has been largely contested lately in the business marketplace. FASB recently issued additional guidance on FAS 157-d to provide aid to practitioners in estimating the fair value of assets in markets that are not active using the principles contained in FASB Statement No. 157, Fair Value Measurements.

Global Standard Convergence

FASB has advocated movement toward all U.S. public companies using accounting standards promulgated by a single global standard setter when preparing their financial reports.

• FASB and IASB target 2011 as date for major joint project completion 
• Read the FASB/FAF comment letter on allowing U.S. registrants to use IFRS and the proposal to eliminate the requirement for certain foreign filers to reconcile to U.S. GAAP
• Robert Herz interview with the Journal of Accountancy

Major structural and operations changes approved

The Financial Accounting Foundation reduced FASB’s governing body from seven members to five and gives the FASB chair the authority to set FASB project plans, agenda and project priorities. The changes are designed to make FASB more nimble and responsive as it heads toward convergence.

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