NORWALK, Conn. – The Financial Accounting Standards Board, inundated with calls to reform its market value accounting rules, agreed yesterday to review its rule for determining the market value of assets in an illiquid market.
Robert Herz, chairman of the fuve-member panel which sets the rule for generally accepted accounting principles, or GAAP, said the Board has heard the criticisms leveled by industry, regulators and some lawmakers, who have suggested the lack of an active market for many securities has made it almost impossible to determine a fair market value for those securities. "We agree," said Herz. "that more application guidance to determine fair values is needed in current market conditions.
Credit unions, especially corporate credit unions, have been among the critics of market value accounting, as illiquid assets continue to pile up among the corporates, causing a masive write-down on their books.
"We’re very pleased about this," said Mary Dunn, director of regulatory affairs for CUNA. "We’ve been asking FASB to look at this for some time now. We do think this is a step in the right direction."
CUNA plans to meet with FASB officials in the near future to discuss credit unions’ concerns , said Dunn.
The FASB plans to review the guidance for determining market values in an illiquid market and report by June, which is considered a rapid review when accounting controversies some times take years to resolve.
Any guidance issued would be applicable to year-end financials for 2009.
