The Financial Accounting Standards Board has decided to shorten the comment period on its proposed guidance for determining the fair value of assets in inactive markets, even as Congress may allow banks to temporarily suspend mark-to-market accounting.

At its Oct. 1 board meeting, FASB Chairman Robert Herz (pictured) announced that the rules of procedure governing the length of comment periods have been temporarily modified to allow a window of time within which FASB can act to provide needed guidance in the interest of investors and the capital markets.

The board agreed that the additional guidance is needed to aid practitioners in estimating the fair value of assets in markets that are not active via application of the principles contained in FASB Statement No. 157 on fair value measurements. The board agreed to make proposed FSP FAS 157-d effective upon issuance. If the proposed FSP is finalized in time, entities with a calendar year-end would apply the guidance in their third-quarter financial statements.

In addition, the board accepted a staff recommendation that the following transition guidance be provided in the proposed FSP:

* Any changes in fair value would be included in an entity's financial results. For example, entities with a calendar year-end would include any changes in fair value in their third-quarter results.

* Retrospective application of the guidance to prior periods would be prohibited.

The exposure draft of the proposed FSP FAS 157-d will be open to comment only until Oct. 9, 2008. A second board meeting will then be held on that date to discuss the comments and any additional matters.

FASB also discussed the applicability of FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes," to private companies. The board agreed to retain the current scope of FIN 48 so it is still applicable to all entities, public and private, including pass-through entities and not-for-profit organizations. FASB also agreed to develop application guidance on FIN 48 for pass-through entities.

In addition, the board agreed on a one-year deferral of FIN 48 for all private pass-through entities based on the entity's federal income tax status. FASB directed the staff to determine whether the proposed scope of the deferral is viable and would not lead to unintended consequences.

The board also agreed to exempt private companies from the disclosure requirements in Paragraphs 21(a) and 21(b) of FIN 48. The board decided that private companies should not be exempt from the other disclosure requirements of FIN 48. FASB plans to issue three proposed FSPs related to FIN 48.

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