FASB AND IASB UNITE ON IMPAIRMENT ACCOUNTING

Norwalk, Conn. - The Financial Accounting Standards Board and the International Accounting Standards Board have published a joint set of proposals to account for the impairment of financial assets such as loans managed in an open portfolio. FASB had earlier favored using fair value measurement for impaired assets, while the IASB favored a "mixed measurement" model using both fair value and amortized cost. FASB has now come around to agreeing more with the IASB's approach, although the IASB is also adopting some of FASB's proposals.

IFRS and U.S. GAAP currently account for credit losses using an incurred-loss model, which requires evidence of a loss (known as a trigger event) before assets can be written down. The boards have proposed moving to an expected-loss model that provides a more forward-looking approach to accounting for credit losses, which they believe better reflects the economics of lending decisions.

The proposals are published as a supplement to an exposure draft published by the IASB in November 2009, and a separate FASB draft published in May 2010. The document is open for public comment until April 1, 2011. During the consultation period, the IASB and FASB will undertake further outreach to seek views on the supplementary document.

 

TEMPLATE OFFERED FOR COMPENSATION DISCUSSION

New York - The CFA Institute has released the Compensation Discussion and Analysis Template, a report that provides guidance for public companies wishing to improve the CD&A portion of their proxy statement. The report and template were produced in collaboration with issuer and investor advocates, and in time for the upcoming 2011 proxy season.

The Compensation Disclosure and Analysis Template is a first step for issuers who wish to make compensation communication clearer and more relevant to investors. It was developed by a CFA Institute-led working group of issuers, investors and associations concerned about this issue.

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