The Financial Accounting Standards Board has issued its final staff positions on changes in its mark-to-market/fair value accounting rule, providing financial institutions more discretion in applying mark-to-market standards to assets caught in illiquid markets. The FASB received more than 600 comment letters, “many emails, and held many face-to-face meetings and other discussions with a broad range of affected constituents,” according to FASB chairman Robert H. Herz.
The final amendments “include a number of new disclosures relating to the determination of fair value and to estimated credit losses and credit exposures,” Herz says in a prepared statement. Fair value disclosures for assets held off the balance sheet must now appear on a quarterly basis rather than annually, along with “qualitative and quantitative information about fair value for all those financial instruments not measured on the balance sheet at fair value,” the FASB states. Changes in the Other Than Temporary Impairment standards were also finalized. Impaired debt securities reflected in earnings will now be tied to credit losses instead of market losses, but the “measure of impairment in comprehensive income remains fair value.”