IASB Updates G-20; FASB, IASB Seek Comment On Proposals

With the first of three joint IASB-FASB roundtables on financial instruments accounting set to take place later this week in Tokyo, (followed by roundtables in London and Norwalk, CT), the IASB released on Aug. 28 an updated table summarizing the IASB's response to recommendations made by the G-20 relating to accounting and financial reporting.

Among the actions taken by FASB and the IASB - partly in response to G-20 recommendations, and partly in response to other recommendations such as those of the Financial Crisis Advisory Group - are proposals relating to financial instruments, fair value, financing receivables (including loans) and the allowance for credit losses. Various proposals carry comment deadlines in September and October.

The comment deadline closed last week on FASB's proposed standard on Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses. Sixty-eight comment letters are currently posted on that proposal, and a quick overview of the different points of view can be seen by reading Comment Letter No. 1, filed by FASB's Investors Technical Advisory Committee, which strongly supports FASB's proposal virtually with no changes, vs. Comment Letters 2 & 68, filed by the American Bankers' Association and the Independent Community Bankers' Association, respectively, which do not support the proposal.

A number of the comment letters filed by banks, Fannie Mae, and others, supported the proposal's disclosures in general - with some recommending changes to perceived check-the-box or prescriptive requirements for aggregation/disaggregation of categories, and other suggested changes - but called upon FASB to extend the proposed effective date until 2010. The request to provide more time was made, according to various comment letters, in part due to the need to make systems changes to gather the information requested in the proposal, and in part due to significant changes that financial institutions and others will face in implementating FAS 166 and FAS 167, issued earlier this year, amending FAS 140 and FIN 46R for securitization and consolidatation accounting (e.g., the end of the QSPE.) Additionally, some of these commenters asked that this project be coordinated with related projects at FASB and the IASB, such as projects on financial instruments, fair value, financing receivables and credit losses, and FASB's Disclosure Framework project.

Upcoming comment deadlines on FASB and IASB proposals on other financial instruments projects (we list only those relating to financial instruments, below, refer to FASB and IASB websites for other proposals out for public comment) include:

• Sept. 1: IASB Request for Information: ('Expected Loss' Model) Impairment of Financial Assets: Expected Cash Flow Approach [NOTE: on the subject of 'expected loss' model vs. 'incurred loss' model, see also our earlier post on SEC's 'Dear CFO' letter]
• Sept 1: IASB Discussion Paper: Credit Risk in Liability Measurement
• Sept. 14: IASB Exposure Draft: Financial Instruments: Classification and Measurement
• Sept. 28: IASB Exposure Draft: Fair Value Measurement
• Oct 12: FASB Proposed Accounting Standards Update—Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements. (NOTE: This proposed ASU was released by FASB on Aug. 28. )

In related news, see: Basel Committee Doesn't Want Fair Value for Loans (WebCPA, Aug. 28). (See also our earlier post noting concerns of the American Bankers' Association on FASB's tentative decisions regarding fair valuing all financial instruments, as FASB continues its deliberations in anticipation of issuing a proposal on financial instruments accounting.)

Returning to the subject at the top of this post, the next G-20 Summit will take place in Pittsburgh, PA on Sept. 24-25. Links to prior recommendations issued by the G-20 can be found here.

Of note, see also IFRS on the G-20 Summit? (by Joseph Bruce, of Schneider Downs, Aug. 10), which states:

IFAC [the International Federation of Accountants] has urged G-20 leaders to utilize the summit platform as an opportunity to speak to the importance of worldwide adoption of global accounting standards and include that concept in the promotion of global economic recovery. ... IFAC also recommended that further steps be taken to enhance the governance of the International Accounting Standards Board (IASB), to assist in its ability to act independently in a standard-setting role without inappropriate political interference.

IASB Chairman Sir David Tweedie added fuel to the potential discussions with his recent comments on the global frustrations with the SEC’s lack of commitment to a transition to International Financial Reporting Standards (IFRS), which have not yet been approved by SEC Commissioner Mary Schapiro. “This is a very interesting moment for us, a once-in-a-lifetime moment. Where is the USA?” asked Tweedie. “If you’re going to have global standards, we need the U.S., but it can’t go on indefinitely. We’ve been converging for seven years. We have a timetable to finish in 2011. It’s designed to fit these major economies – Korea, Canada, Japan, and India – who are converging that year. We have to finish that year.”

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