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NEWS RELEASE
Aug. 13, 2009
ABA Media Contact: Jonathan Snowling
(202) 663-5468
E-mail: jsnowlin@aba.com
ABA CAUTIONS FASB AND IASB ON PACE AND DIRECTION
OF ACCOUNTING STANDARD SETTING
ABA white paper expresses concern over an expansion of mark-to-market, lack of
due process and divergence between IASB and FASB
WASHINGTON – The American Bankers Association released a white paper today raising concerns and urging caution over the process being taken by the Financial Accounting Standards Board and the International Accounting Standards Board on projects relating to financial instruments.
"What the accounting boards are discussing now would be the biggest accounting change we've ever seen," said Donna Fisher ABA's senior vice president of tax, accounting and financial management. "We are deeply concerned that the shortcuts being taken will result in flawed or inconsistent rules."
ABA expressed concern that the standard setting process is being compromised, partly because IASB's timeline for completion may not allow U.S. companies to have a chance for appropriate due process in providing input.
"If the IASB finalizes its rule on accounting for loans and debt securities prior to the FASB finalizing its rule, FASB will have to adopt the IASB's rules or adopt a different rule which would result in divergence between U.S. GAAP and international rules," the white paper stated. "The goal should be improving the current accounting rules that are in need of repair within a time frame that provides for due process and strives for international convergence."
In the white paper, ABA takes aim at recent proposals that call for an expansion of mark-to-market accounting in financial statements. Bankers have long supported mark-to-market accounting for assets that are actively traded, but have opposed it for most of the traditional loans that banks make.
"Given the role that mark-to-market has played in exacerbating the current economic crisis, it is hard to understand the rationale for expanding it at this time," said Fisher. "Mark-to-market accounting lacks a sufficient level of reliability, which the current market has demonstrated."
The American Bankers Association brings together banks of all sizes and charters into one association. ABA works to enhance the competitiveness of the nation's banking industry and strengthen America's economy and communities. Its members – the majority of which are banks with less than $125 million in assets – represent over 95 percent of the industry's $13.5 trillion in assets and employ over 2 million men and women.
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