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,

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

Related reading

Fiona Westwood of Smith and Williamson.