FASB changes accounting rule for credit crisis

The Financial Accounting Standards Board (FASB) has proposed change to accounting rules in an effort to bring greater consistency in reporting impairments for financial instruments affected by the credit crisis.

The proposal is one of four short-term projects, on which the board has been working to improve disclosures on the way companies take writedowns for securities which have lost value because of the credit crisis, Reuters reports.

The board also revealed it would start a joint project with the International Accounting Standards Board (IASB) to better 'address the complexity in existing standards' for accounting and reporting for financial instruments.

FASB expects the proposed change will lead to more consistent accounting judgments on whether other-than-temporary asset impairments have occurred.

Further reading:

FASB drops plan to tweak fair value rule