Review Panel Submits 1,100 Comments for FASB’s Financial Instruments Project
Financial Accounting Standards Board (“FASB”) staff members are currently reviewing over 1,100 comments regarding the late-stage drafts of its final standards for financial instruments. Hoping to meet its year-end publication deadline, the accounting board enlisted 29 panelists as part of a “fatal flaw” review process for feedback on the standards. Reviews generally take a few weeks to complete, but the FASB is taking a more detailed approach due to the standards’ complexity and significance.
Of the 1,100 comments submitted, approximately 900 addressed issues concerning the asset impairment standard. The standard, which focuses on writing down bad loans and debt securities, was publicly released in draft form in 2012 as Proposed Accounting Standards Update (ASU) No. 2012-260, Financial Instruments: Credit Losses (Subtopic 825-15). Some asset impairment standard comments call for additional guidance regarding how troubled debt restructurings are treated, the current expected credit loss model, and handling of beneficial interests. The Transition Resource Group, which was created to assist with the transition to the asset impairment standard, was scheduled to review the standard’s progress with FASB representatives during a closed-door meeting.
The remaining 200 comments discussed the classification and measurement standard. A draft version of the standard was publicly issued two years ago as Proposed ASU No. 2013-220, Financial Instruments: Overall (Subtopic 825-10), Recognition and Measurement of Financial Assets and Financial Liabilities.
FASB staffers are looking over the remaining comments to decide whether they require the FASB’s review. In the meantime, contact your local Cherry Bekaert Financial Services Group professional for more guidance on the financial instruments standards.