RegulationAccounting StandardsSEC pushes for more credit crunch disclosures

SEC pushes for more credit crunch disclosures

SEC staff are drafting a letter to encourage disclosures around writedowns and asset valuations in the footnotes and discussion sections of financial results

The US regulator is planning to issue new accounting guidance which is set to
allow companies the opportunity to fully explain the massive losses they are
forced to record under controversial accounting rules.

Sources close to the Securities and Exchange regulator said staff were
drafting a letter which encouraged companies to make additional disclosures
around writedowns and asset valuations in the footnotes and discussion sections
of financial results.

Companies would include the disclosures to statements for the first quarter,
the FT reported.

The new guidance stems from the regulator’s interest in the writedowns which
caused chaos on balance sheet and rocked share prices, causing companies to call
for a suspension of the ‘fair value’ approach.

Wall Street executives have made the case that much of the recorded losses,
recorded under fair value rules, will never materialise because the assets will
not be sold until their value recovers.

Further reading:

Watchdogs push for accounting rules review

IASB defends use of ‘fair value’ accounting

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