US lender forced to restate earnings

CIT Group, a major US commercial and consumer lender, has been forced to
restated first-quarter earnings – lowering them by 26% – after it decided to put
off adopting an accounting rule it had previously adopted.

The company is at odds with a rule released by the Financial Accounting
Standards Board known as ‘Statement No. 159’ which allows companies to record
financial assets and liabilities at their fair value, instead of at their
historical value.

CIT said it had received guidance which stated that the company could face
continued earnings volatility from adopting the rule early. Most companies must
adopt Statement No. 159 on 1 January, 2008, but are allowed to embrace it before

Further reading:

‘Flawed’ map threatens convergence

Fair value convergence could split
transatlantic accounting

Our principles are being eroded

Related reading