Wednesday, April 1, 2009

FEI Responds To FASB's Proposals On Fair Value, OTTI

Earlier today, FEI's Committee on Corporate Reporting (CCR) filed comment letters with the Financial Accounting Standards Board on FASB's recent proposals to improve guidance for fair value in inactive markets, and other-than-temporary-impairment (OTTI).

FASB is scheduled to vote at its board meeting tomorrow morning on whether to issue the two proposals (Proposed FASB Staff Positions or FSPs) as final guidance, and whether to make any changes from the proposals based on comments received.

See the links to FEI's comment letters, FASB's proposals, and all comment letters posted by FASB so far, below.

FEI CCR letter to FASB on Proposed FSP FAS 157-e, Determining Whether a Market Is Not Active and a Transaction Is Not Distressed (See the Proposed FSP; comment deadline April 1.) (See all the related comment letters posted by FASB so far.)

FEI CCR letter to FASB on Proposed FSP FAS 115-a, FAS 124-a and EITF 99-20-b, Recognition and Presentation of Other-Than-Temporary Impairments. (See the Proposed FSP; comment deadline April 1.) (See all the related comment letters posted by FASB so far.)

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Neil said...

It's all well and good to permit the use of judgment in the process of estimating fair values, but FEI is buying into the arguments put forward by the very people responsible for the "distressed" nature of the markets and the "toxic" nature of these so-called "toxic assets".

Once upon a time, assets were things of real value - the notion of toxicity is of course a contradiction of any reasonable conceptual definition of an asset.

But this is expedient. Allow people who bet their companies on risks they did not even understand and should never have taken - imprudent, even reckless, people - allow these people to exercise their influence in setting accounting principles, and you will have financial statements that serve the interests of speculators and crooks, and that do not meet the needs of investors.

Bernie Madoff may as well be permitted to head the SEC; these new rules are a fraud.

Edith Orenstein said...

Update: As of 7:30 pm EDT Wed. night April 1, FASB has received and posted (at the links to comment letters shown in our post, above) over 350 comment letters on the fair value proposal, and over 275 comment letters on the OTTI proposal.

Godeke said...

Not only is the Fox in the Hen House, the doors are being removed.

Neil said...

The sad part is that, despite the embarrassments to our profession that led to Sarbanes-Oxley, we continue to dance to whatever tune management chooses to play, no matter how self-serving and dishonest the tune may be.

The FASB acted swiftly to preserve its position of influence in standard-setting, but by caving so quickly to the demands of the banks, they have lost all credibility.

It is time for the SEC (a reformed and strengthened SEC) to take the setting of standards away from the cowards and shills at the FASB.