Letter to FASB on the Invitation to Comment re: Recognition of Intangibles

Dear Mr. Day:

The American Bankers Association (ABA) welcomes the opportunity to comment on the invitation to comment exposure document - Invitation to Comment, Recognition of Intangibles ("the Exposure Document," or "ITC"). The ITC requests feedback on whether the Financial Accounting Standards Board ("FASB," or "the Board") should pursue a project on the initial recognition of intangibles.

ABA does not support a project focused on the initial recognition of intangibles. ABA is not aware of a demand for more of this information from bank investors, so considering the incremental cost to prepare and audit the additional information would likely be significant, we do not believe the benefit would exceed the cost.

ABA believes there is no pervasive need to improve GAAP related to the accounting for and disclosure of intangibles. Intangible assets are tied together by a lack of physical substance, but otherwise this classification includes a diverse range of assets representing a wide variety of rights, complexity, and uncertainties. For example, certain intangible assets trade very infrequently (if at all) and also are not directly tied to a related cash flow. A disproportionate amount of resources would be required to support their measurement in the financial statements.

On the other hand, other intangible assets (for example crypto) can and have been addressed through narrow scope projects. Other disparities in the accounting for intangible assets are often tied to the differences in the development or acquisition of the asset. These issues are more directly tied to business combination accounting requiring valuation under the purchase method.

Entities in some industries provide supplemental and voluntary disclosure to effectively meet investor needs and to fill some of the perceived gaps in intangible reporting. To the extent improvement is needed in GAAP, ABA believes any approach should have a narrow scope focus, rather than considering sweeping changes.

Thank you for considering these comments and I look forward to a continuing dialogue on this effort. If you need additional information or have questions, please contact me ([email protected]; 202-663-5318).

Sincerely,
Joshua Stein