The Financial Accounting Standards Board meets today to discuss proposals relating to the valuation of toxic assets, according to Reuters. The audit regulator will attempt to better determine the nature of mark-to-market accounting methods in the face of an economy devastated by depressed asset values and an overall lack of liquidity.
FASB, in conjunction with the Public Company Accounting Oversight Board (PCAOB), looks to establish a firm set of guidelines for valuing the lagging assets whose fair value-determined worth many have blamed for the current economic malaise.
Said a PCAOB spokesperson, “[We] will evaluate the FASB’s accounting guidance to determine whether any conforming amendments to the auditing standards will be necessary, or whether other guidance would be helpful.”
FASB is considering a proposal that would determine the time frame by which a company is required to report a writedown on weakened assets. Under the proposal, financial firms could separate credit and non-credit losses, taking a smaller loss on their income statement.
Such a proposal could be difficult, says Jim Pitrat of accounting firm SingerLewak, “due to complexities in the securities, including visibility into underlying assets.”