Wednesday, November 14, 2007

CNBC: partial FASB 157 Delayed One Year

by Bill McBride on 11/14/2007 02:37:00 PM

Update from LaSalle Street in the comments:

I e-mailed the FASB today about the implementation of Rule 157. (There was a news story on CNBC about delaying Rule 157)Here is their reply:
On Oct 17, the FASB agreed not to defer the effective date of FASB Statement 157, Fair Value Measurement, in its entirety. At today's meeting, the staff reviewed various deferral alternatives. The Board voted on Alternative "B" - to defer the effective date of Statement 157 for one year for all nonfinancial assets and nonfinancial liabilities, except for those items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually).

More information about Alternative "B" is available in the Board meeting handouts, a link to which is provided at www.fasb.org. More details about what was decided today will also be posted shortly on www.fasb.org.

Communications Manager
Financial Accounting Foundation
I did not see this report, but several people have confirmed seeing it on CNBC (hat tip Tim, gamma and others). Perhaps a portion of FASB 157 has been delayed, so we need to wait for more news.

FASB 157 was scheduled for implementation tomorrow.

Just one month ago, the WSJ reported: FASB Won't Delay Market-Value Rule
Accounting rule makers decided against deferring a new rule that lays out for companies how to apply market values to financial instruments, as well as some nonfinancial assets, and that mandates disclosures breaking down differences in easy-to-value versus hard-to-price securities.

But a divided Financial Accounting Standards Board left the door open to deferring the rule as it applied to nonfinancial assets on corporate balance sheets, or perhaps to private companies who follow generally accepted accounting principles. Groups such as Financial Executives International, an industry group, had lobbied the board to defer in its entirety the rule, known as FAS 157, for a year.

The seven-member FASB rejected such a proposal by a four-to-three vote.

FAS 157 takes effect for companies with fiscal years beginning after Nov. 15, 2007. This means that most companies will have to begin using the standard from the start of next year. However, many large investment houses and banks chose to adopt the standard early and its disclosures have proven crucial during the recent unrest in debt markets.
emphasis added.

Perhaps this is a delay for nonfinancial assets on corporate balance sheets.