Economic Optimism Dips Slightly in U.S., Europe: FEI-Baruch CFO Outlook Survey

The recently released survey results of the quarterly CFO Outlook Survey, conducted by FEI and Baruch College's Zicklin School of Business, show a dip in optimism for the 1Q 2011. In addition to surveying CFO confidence and optimism levels in the U.S. and Europe, the survey addresses CFO views on the potential impact of world events, Dodd-Frank implementation, and adoption of social media. Read the press release for more details.

PCFRC To Meet With FASB This Week

The Private Company Financial Reporting Committee (PCFRC), formed jointly by the Financial Accounting Standards Board and the AICPA in 2007 to advise FASB on matters relating to private companies vis-à-vis existing and proposed accounting standards, is slated to meet with members of the FASB board and staff later this week, in a public meeting which will be webcast.

The PCFRC will also meet with representatives of the Financial Accounting Foundation, which oversees the FASB. As previously reported, the FAF is conducting outreach on standard-setting for private companies, including with respect to the recommendations made earlier this year by a blue ribbon panel on private company standard-setting. See the comment letter filed by FEI's Committee on Private Company Standards (CPC-S).

The agenda, linked in the PCFRC meeting materials, notes there will be general updates and discussion of various FAF and FASB initiatives under way to study potential improvements in the standard setting process as relates to private company constituents, and more specific discussion of particular accounting standards.

George Beckwith, Chairman of FEI’s Committee on Private Company Standards (CPC-S), serves as a member of the PCFRC in his personal capacity, along with a number of other FEI members. (See PCFRC roster).

FASB Issues Accounting Standards Update On Repos

On Friday, the Financial Accounting Standards Board released an Accounting Standards Update on repos. The full title the document, ASU 2011-03, is: Transfers and Servicing (Topic 860): Reconsideration of Effective Control for Repurchase Agreements.

As noted in FASB's press release:

The Update is intended to improve financial reporting of repurchase agreements
(“repos”) and other agreements that both entitle and obligate a transferor to repurchase or redeem financial assets before their maturity.

The Board revisited its standards on transfers and servicing to respond to concerns from financial statement users who felt the criteria for determining effective
control for such transactions should be improved,” stated FASB Chairman Leslie
F. Seidman. “The new guidance improves transparency by eliminating consideration
of the transferor’s ability to fulfill its contractual rights and obligations from the criteria in determining effective control.”

In a typical repo transaction, an entity transfers financial assets to a counterparty in exchange for cash with an agreement for the counterparty to return the same or equivalent financial assets for a fixed price in the future. Topic 860, Transfers and
Servicing, prescribes when an entity may or may not recognize a sale upon the
transfer of financial assets subject to repo agreements. That determination is based, in part, on whether the entity has maintained effective control over the transferred financial assets.

The amendments in this Update are intended to improve the accounting for these transactions by removing from the assessment of effective control the criterion requiring the transferor to have the ability to repurchase or redeem the financial assets, as well as implementation guidance related to that criterion.