14 August 2009

ABA concerned about accounting overhaul for financial instruments

The American Bankers Association released a white paper raising concerns and urging caution over the process being taken by the FASB and the IASB on projects relating to financial instruments. 

The ABA is deeply concerned that the shortcuts being taken with the overhaul will result in flawed or inconsistent rules. 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, ABA said.

“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.

Press release

White paper