RegulationAccounting StandardsUS change trailed as cutting losses from mortgage securities

US change trailed as cutting losses from mortgage securities

Speculation mounts that fair value is being eased in US

Changes to accounting standards in the US are being touted as potentially
cutting losses on mortgage-backed and asset backed securities.

The change comes to the US standard FAS157, the key rule that embodies fair
value accounting. The changes, according to
Financial
Week
, mean future cash flows can be taken into account when testing
securities for impairment.

The UK watchdog, the Financial Reporting Review Panel, yesterday said it
would looking closely at impairment testing in accounts composed during the
financial crisis.

Financial Week quotes New York tax expert Robert Willens saying: ‘They’re
trying to introduce a little realism’ into fair value accounting, ‘This may be
the first break in the dam.’

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