FASB Considering Additional Fair Value Guidance

FASB is meeting Wednesday mornning to discuss what new guidance may be needed to clarify FAS 157.

The Financial Accounting Standards Board is expected to issue additional guidance on fair value accounting soon, and will discuss its plans at a meeting today, which is scheduled to begin at 9:00 am. The meeting’s original agenda included a discussion on mergers and acquisitions for non-profit organizations, but that topic has been scrapped, and replaced with items related to two accounting rules, FIN 48 and FAS 157.

FIN 48 addresses accounting for uncertain tax positions, while FAS 157 is the key rule being debated by Congress, bank lobbyists, trade groups, and the Bush Administration, with respect to fair value accounting. FAS 157 lays out rules related to how companies should measure assets and liabilities under the fair value accounting method.

The FASB meeting comes on the heels of new fair value guidance issued by FASB and the Securities and Exchange Commission on Tuesday afternoon. The new guidance addressed particularly pressing issues related to how illiquid assets are measured using the fair value methodology. In essence, FASB and the SEC, without changing the FAS 157, clarified that companies may use management’s internal assumptions, such as expected cash flow, when valuing the assets.

The discussion on FAS 157 is slated begin at 10:00 am, follow the FIN 48 discussion. A webcast of the meeting is available at www.fasb.org.

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