Views on improving the integrity of global capital markets
04 March 2011

CFA Institute Meets with FASB

CFA Institute along with its advisory committee, the Corporate Disclosure Policy Council (CDPC), recently held its annual meeting with the Financial Accounting Standards Board (FASB), available by audio webcast.

The 11 February meeting was an opportunity for CFA Institute staff and members of the CDPC to provide comments on a number of key projects, including Revenue Recognition, Leases, and Financial Instruments. For the Revenue Recognition and Leases projects, we summarized key aspects of CFA Institute’s recently issued comment letters in response to the respective exposure drafts along with perspectives on issues recently redeliberated by the FASB and the International Accounting Standards Board (IASB). CFA Institute emphasized the importance of disclosures in the implementation of the revised guidance.

As it relates to Financial Instruments, CFA Institute staff and FASB discussed proposed changes to the recognition and measurement criteria which would allow entities to follow a business strategy approach and record certain financial assets at amortized cost instead of the fair value-based measurement approach proposed in the FASB exposure draft. CFA Institute indicated that this move away from a fair value-based measurement approach would necessitate that fair values be presented on the face of the balance sheet (i.e. not subsequently disclosed in the notes to the financial statements), be computed in compliance with an exit value approach as required by fair value guidance, and include disclosures related to risks and uncertainties.

CFA Institute also encouraged the FASB and IASB to consider similar issues across projects (i.e. “cross-cutting issues”) where the Boards may be reaching conceptually inconsistent decisions — including the time value of money, discount rates, expected loss and expected value techniques, and updating of assumptions at subsequent measurement — across projects to ensure conceptually consistent recognition and measurement decisions.

We also shared views on the Effective Dates and Transition Methods Exposure Draft — which would establish the effective dates for the newly proposed standards — and also very briefly emphasized the importance of the Financial Statement Presentation and Loss Contingencies projects to investors. Finally, CFA Institute staff and members of the CDPC also provided perspectives on the Investment Properties Project encouraging the FASB to further broaden the scope of the project.

We look forward to providing input to the IASB at our annual meeting on 5 April 2011 in London.

Please share with us your thoughts on these key issues in the standard-setting process.

About the Author(s)
Sandy Peters, CPA, CFA

Sandy Peters, CFA, is head of financial reporting policy and serves as spokesperson for CFA Institute to key financial reporting standard setters including the IASB, FASB, and the US Securities and Exchange Commission. She holds the Certified Public Accountant (CPA) designation.

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