, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

  • **

FASB Will Vote Tomorrow on Relaxing Mark-to-Market Accounting

The Financial Accounting Standards Board is set to debate proposals to change mark-to-market accounting.

FASB Will Vote Tomorrow on Relaxing Mark-to-Market Accounting

The Financial Accounting Standards Board is set to debate proposals to change mark-to-market accounting.

To read more about the proposed changes, click here.

[or see FASB info below.]


  • **

My note –

I have a lot of paintings that I’ve done over the years. If I went to a bank or investor and asked to use them as collateral for a loan – what value would they give them? Do you really think it would be $3,000 – $4,000 dollars a piece when I might only get $25 dollars each for them if I’m lucky and catch the right person to talk them into it? That banker would tell me that as collateral, they are worthless.

And, if I had a recent track record of receiving $25 each, then that is the value that a banker, corporate investment manager, investor, “financial engineer” or business person would give them as a value, not what my costs were to create them, and not what they would be worth if the market was more favorable and not what they would be worth in comparison to other items selling in the marketplace.

It wouldn’t take a banker or accountant five minutes to say that to me and refuse a loan to me for a business based on those paintings or anything else. So, why do they get to value things as they see fit and why would our government let them do it after all the harms that have been caused by doing it that way?

– cricketdiane, 04-02-09

  • *

The Valuation Resource Group (VRG) will provide the FASB staff with information on the existing implementation issues surrounding fair value measurements used for financial statement reporting purposes and the alternative viewpoints associated with those implementation issues.

[See down page]

  • **

Financial Accounting Standards Advisory Council
Mr. Dennis H. Chookaszian
Financial Accounting Standards Advisory Council

Ms. Joan L. Amble
Executive Vice President and Corporate Comptroller
American Express Company

Dr. Ray Ball
Sidney Davidson Professor of Accounting
Graduate School of Business
The University of Chicago

Mr. David Bianco
Managing Director and Head of U.S. Equity Strategy,
Valuation and Accounting
UBS Investment Research

Mr. Mark M. Bielstein

Dr. James L. Bothwell
Founder and President
Financial Market Strategies LLC

Mr. Peter Bridgman
Senior Vice President and Controller
PepsiCo, Inc.

Mr. Robert L. Bunting
Chair International Services Group
Moss Adams LLP

Mr. Curtis L. Buser
Managing Director and Chief Accounting Officer
The Carlyle Group

Dr. Carolyn M. Callahan
Doris M. Cook Chair in Accounting
Sam Walton School of Business
University of Arkansas-Fayetteville

Mr. Michael P. Cangemi
Director of Various Boards and President & Chief Executive Officer
Cangemi Company LLC

Mr. William G. Clark
State of New Jersey
Division of Investment

Mr. Vincent P. Colman
U.S. National Office Professional Practice Leader

Mr. Stephen J. Cosgrove
Vice President, Corporate Controller
Johnson & Johnson

Mr. Timothy J. Curt
Managing Director and Chief Financial Officer
Warburg Pincus LLC

Mr. Jerry M. de St. Paer
Executive Chairman
GNAIE—Group of North American Insurance Enterprises

Mr. Richard K. Dinkel
Corporate Controller and Chief Accounting Officer
Koch Industries, Inc.

Mr. Lewis Dulitz
Vice President of Accounting Policies & Research

Mr. Ralph C. Ferrara
Managing Partner
Dewey & LeBoeuf LLP

Mr. Leonard F. Griehs
Vice President, Investor Relations
Campbell Soup Company

Ms. Marie N. Hollein
President and Chief Executive Officer
Financial Executives Institute

Mr. Gary R. Kabureck
Vice President & Chief Accounting Officer
Xerox Corporation

Dr. Mark H. Lang
Thomas W. Hudson, Jr./Deloitte and Touche L.L.P.
Distinguished Professor
Kenan-Flagler Business School
University of North Carolina

Mr. Richard D. Levy
Executive Vice President & Controller
Wells Fargo Bank, N.A.

Mr. Feilong Li
CNOOC Limited

Mr. John B. Morse, Jr.
Vice President—Finance, Chief Financial Officer
The Washington Post Company

Mr. George Muñoz
Muñoz Investment Banking Group

Mr. Joel S. Osnoss
Global IFRS and Offering Services
Deloitte & Touche LLP

Mr. Lawrence K. Probus
Chief Financial Officer & Senior Vice President
World Vision U.S.

Mr. Steven A. Rogers
President and Chief Administrative Officer
Dominion Resources Services, Inc.

Mr. David E. Runkle
Director of Quantitative Research
Trilogy Global Advisors

Ms. Arleen R. Thomas
Senior Vice President, Member Competency and Development
American Institute of Certified Public Accountants

Mr. Randy J. Vest
Vice President and Controller; Chief Accounting Officer
Kimberly-Clark Corporation

Dr. Terry D. Warfield
Robert and Monica Beyer Professor of Accounting
Wisconsin School of Business

Ms. Shannon S. Warren
Managing Director,
Corporate Accounting Policies Group
JP Morgan Chase

Mr. William Widdowson
Head Group Accounting Policy

Mr. Brent A. Woodford
Senior Vice President, Planning and Control
The Walt Disney Company

Mr. Jed Wrigley
Director & Fund Manager
Fidelity International Ltd.

Mr. William L. Yeates
National Director of Audit and Accounting
Hein & Associates LLP


  • **

Private Company Financial Reporting Committee

The Committee consists of a chair plus twelve members and includes four CPA practitioners, four financial statement preparers, and four users of private company financial statements. The founding members of the PCFRC are:

Judith H. O’Dell, Chair
O’Dell Valuation Consulting, LLC

Charles Bramley
Briggs Bunting & Dougherty

Daryl Buck
Vice President and CFO
Reasor’s, Inc

John R. Burzenski
Burzenski & Company

Michael Cain
Senior Executive Vice President
Frost Bank

Thomas J. Groskopf
Barnes Dennig

Mary Ann Lawrence
Senior Vice President
Key Corporation

David Lomax
Area Underwriting Manager
Liberty Mutual Surety

Jerry Murphy
Todd and Sargent Inc

Chris A. Rogers
Vice President of Finance and Administration
Infragistics, Inc.

Steven A. Shelton
Way, Ray, Shelton and Company

James K. Smith
Vice President and CFO
Phonon Corporation

James Stevenson
ABS Capital Partners


  • **

Financial Crisis Advisory Group (FCAG)

Harvey J. Goldschmid
Former Commissioner, United States Securities and Exchange Commission
United States

Hans Hoogervorst
Chairman, AFM (the Netherlands Authority for the Financial Markets)

John Bogle
Founder, Vanguard
United States

Jerry Corrigan
Goldman Sachs and Former President of the New York Federal Reserve Bank
United States

Fermin del Valle
Former President, International Federations of Accountants

Jane Diplock
Chairman, International Organization of Securities CommissionsExecutive Committee
New Zealand

Raudline Etienne
Chief Investment Officer, New York State Common Retirement Fund
United States

Stephen Haddrill
Director General, Association of British Insurers
United Kingdom

Toru Hashimoto
Former Chairman, Deutsche Securities Limited

Nobuo Inaba
Former Executive Director, Bank of Japan

Gene Ludwig
Former Comptroller of the Currency
United States

Yezdi Malegam
Board Member, National Reserve Bank of India

Klaus-Peter Müller
Chairman of the Supervisory Board, Commerzbank

Don Nicolaisen
Former Chief Accountant, U.S. Securities and Exchange Commission
United States

Wiseman Nkuhlu
Chairman of the Audit Committee, AngloGold Ashanti; Former Economic Advisor to the President of the Republic of South Africa
South Africa

Tommaso Padoa-Schioppa
Former Finance Minister

Lucas Papademos
Vice-President, European Central Bank

Michel Prada
Former Chairman, Autorité des marchés financiers

Basel Committee of Banking Supervisors

Committee of European Securities Regulators

Financial Stability Forum

International Association of Insurance Supervisors

Japan Financial Services Agency

U.S. Securities and Exchange Commission

Nelson Carvalho, IASB Standards Advisory Council Chairman, Brazil

Dennis Chookaszian, Chairman, Financial Accounting Standards Advisory Council, United States


Investor Task Force (ITF)

In September of 2005, the FASB announced the launch of its Investor Task Force (ITF). The ITF is an advisory resource that provides the Board with sector specific insight and expertise from the professional investment community on relevant accounting issues.

The ITF is comprised of the nation’s largest institutional asset managers, each of which provides the FASB with an institutional contact point—typically the Director of Research—who identifies industry specific analysts at their respective firms that match the sector requirements of each standard setting initiative. For example, if an issue on the FASB’s agenda relates to the oil industry, the ITF, as appropriate, would appoint an oil and gas analyst to advise the Board and staff from at least one of the ITF member firms.

ITF Member Firms and their affiliates maintain more than $3 trillion in assets under management. They include:

  • The Capital Group Companies
  • Fidelity Investments
  • General Electric Asset Management
  • Mellon Financial Corporation
  • Putnam Investments
  • T. Rowe Price
  • Wellington Management


  • **

Financial Accounting Standards Board
Investors Technical Advisory Committee Members

Members As Of January 2009

Neri Bukspan
Chief Accountant
Standard & Poor’s

Jack Ciesielski
R.G. Associates, Inc.

Michael C. Gyure
Accounting Research Analyst
FTN Midwest Securities

Adam Hurwich
Managing Member
Calcine Management, LLC

Mark C. LaMonte
Senior Vice President—Head of Enhanced Analytics Group
Moody’s Investors Service

Jeffrey P. Mahoney
General Counsel
Council of Institutional Investors

Rebecca McEnally
CFA Centre for Financial Market Integrity
CFA Institute

Elizabeth Mooney
Accounting Analyst
The Capital Group Companies

Michael A. Moran
Vice President
Global Markets Institute
Goldman, Sachs & Co.

Mary Hartman Morris
Investment Officer
Corporate Governance—Global Equities
California Public Employees’ Retirement System

Dane Mott, CFA, CPA
U.S. Accounting and Valuation Equity Research
J.P. Morgan Securities Inc.

Janet Pegg
Accounting & Tax Analyst
Encima Global LLC

Lynn E. Turner
Private Investor and Member, Board of Trustees, AARP Funds,
and Colorado Public Employees Retirement Association


  • **

Small Business Advisory Committee Members

Mr. P. Glenn Bradley
Chilton & Medley PLC

Mr. Gary M. Cademartori
Wall Street Technology Group, LLC

Mr. Robert A. Dyson
Managing Director
RSM McGladrey

Mr. Mark Ellis
Chief Financial Officer
Michael C. Fina

Mr. Richard E. Forrestel, Jr.
Cold Spring Construction Company, Inc.

Mr. Richard H. Gesseck

Mr. William G. Hall
Chairman and Chief Executive Officer
William G. Hall & Company

Mr. Gregory P. Hanson
Managing Director
First Cornerstone

Mr. Dennis R. Hein, CPA
Seim, Johnson, Sestak & Quist, LLP

Mr. W. Stephen Holmes
General Partner
InterWest Partners

Mr. A. Donald Janezic
Senior Vice President, Finance & Administration, Chief Financial Officer, Treasurer
Bigelow Tea Co.

Mr. Albert G. Pastino
Managing Director
Amper Investment Banking, LLC

Mr. Neal A. Petrovich
Executive Vice President and Chief Financial Officer
Hampton Roads Bankshares

Mr. Richard L. Reed
Executive Managing Director, Chief Financial Officer
National Cooperative Bank (NCB)

Mr. Leonard Steinberg
Steinberg Enterprises, LLC

Mr. Troy D. Templeton
Partner & Chief Operating Officer
Trivest Partners

Mr. E. Anson Thrower

Mr. Scott M. Waite
Senior Vice President and Chief Financial Officer
Patelco Credit Union

Ms. Deborah Anne Wilson
Chief Financial Officer
Utility Service Co., Inc.

Mr. Samuel E. Wilson, CPA
Senior Vice President/Chief Financial Officer
Bonneville International Corporation

Ms. Candace Wright
Audit Director
Postlethwaite & Netterville


  • **

Financial Accounting Standards Board
User Advisory Council Members

Ms. Jane Adams
Managing Director
Maverick Capital, Ltd.

Mr. Robert Axel
Vice President
Prudential Financial

Mr. Jeremy Bean
Vice President
Morgan Stanley

Mr. Neri Bukspan
Chief Accountant
Standard & Poor’s

Ms. Julie Burke
Managing Director
Fitch Ratings

Ms. Ann Duignan
J.P. Morgan Securities

Mr. Robert Ehudin
Managing Director,
Credit Risk Management Advisory Group
Goldman, Sachs & Co.

Ms. Alison Emmerich
Senior Credit Analyst
Dreyfus Corporation

Mr. Robert E. Friedman
Private Investor
Premier International Corp.

Mr. James Goff
Director of Research
Janus Capital Group

Mr. Neville Grusd
Executive Vice President
Merchant Financial Corp.

Mr. Trevor Harris
Vice Chairman
Morgan Stanley

Mr. Charles Hill

Mr. Gregory J. Jonas
Managing Director
Moody’s Investors Service

Mr. Joe Joseph
Managing Director
Putnam Investments

Ms. Elizabeth F. Mooney
Accounting Analyst
The Capital Group Companies

Mr. Sudhir Nanda
Vice President
T. Rowe Price Associates, Inc.

Mr. F. Barry Nelson
Senior Vice President
Director of Research
Advent Capital Management LLC

Mr. Mark Newsome
ING Capital LLC

Ms. Janet Pegg

Mr. Stephen Percoco
Security Analyst
Lark Research Inc.

Mr. Adam Quinton
First Vice President
Merrill Lynch

Mr. Hal Schroeder
Portfolio Manager
Carlson Research/Connecticut, Inc.

Mr. Rick Sherlund
Portfolio Manager
Galleon Group

Mr. Damon Silvers
Associate General Counsel

Ms. Rita Spitz
William Blair & Company, LLC

Mr. James Wei
Private Investor

Ms. Christianna (Christy) Wood
Chief Executive Officer
Capital Z Asset Management


  • **

Valuation Resource Group
Last Updated: March 16, 2009 (Updated sections are indicated with an asterisk *)

The staff has prepared this summary of Board decisions for information purposes only. Those Board decisions are tentative and do not change current accounting. Official positions of the FASB are determined only after extensive due process and deliberations.

  • Objective
  • Issues Discussed to Date
  • Valuation Resource Group Members
  • History and Background
  • Contact Information
  • Objective

In step with its mission to improve and enhance the quality, consistency, and comparability of financial statements, the FASB continues to assess whether and to what extent additional and more specific valuation guidance is needed for financial reporting purposes beyond the guidance provided in FASB Statement No. 157, Fair Value Measurements. The Board seeks to solicit the views of its constituents through the formation of a resource group tasked with assisting the Board in matters involving valuation for financial reporting purposes.

The Valuation Resource Group (VRG) will provide the FASB staff with information on the existing implementation issues surrounding fair value measurements used for financial statement reporting purposes and the alternative viewpoints associated with those implementation issues.

The VRG’s meetings are closed to the public and minutes are not distributed. The meetings are closed since this group does not make any authoritative decisions. Any authoritative decisions are subject to the FASB’s normal open due process, including open deliberation by the Board.

The next meeting of the VRG is scheduled for April 7, 2009. The VRG will hold a session with the FASB Board from 3:00 to 5:00 p.m. that is open to the public. Constituents also may listen to that session via webcast.

*Issues Discussed to Date

The issues discussed at the February 5, 2009 meeting include:

The SEC Study on Mark-to-Market Accounting

Proposed FASB Staff Position (FSP) FAS 157-c, Measuring Liabilities under Statement No. 157

The AICPA Draft Issues Paper, FASB Statement No. 157 Valuation Considerations for Interests in Alternative Investments

Goodwill Impairment Considerations

The issues discussed at the September 23, 2008 meeting include:

The IASB Expert Advisory Panel White Paper: “Measuring and disclosing the fair value of financial instruments in markets that are no longer active”

Fair Value Disclosures

Observable vs. Unobservable Inputs

Fair Value Measurement of Liabilities under FAS 157

Allocation of In-Use Valuation to Individual Unit of Account
rued Liabilities

Identification and Allocation of Market Participant Synergies

Fair Value of a Noncontrolling Interest and a Previously Held Equity Interest

The issues discussed at the May 8, 2008 meeting include:

Observable vs. Unobservable Fair Value Measurements in the Current Credit Environment

Determining Whether a Discount should be Applied for a Restriction on Sale

Employee Benefit Plans

Contingent Liabilities

The issues discussed at the February 1, 2008 meeting include:

Accounting for assets that the acquirer does not intend to use or intends to use in a way other than its highest and best use

Overlapping customer relationships

Valuation of intangible assets using “current replacement cost”

Meaning of “legally permissible” in assessing highest and best use

Allocation of portfolio based credit adjustments for hedge effectiveness testing

The issues discussed at the November 9, 2007 meeting include:

Deferral of the effective date of FASB Statement No. 157, Fair Value Measurement

Development of market participant assumptions and use of an entity’s own data (similar to issue discussed at October 1, 2007 meeting)

Unit of valuation and exit markets, whether unit of valuation can be more disaggregated than the unit of account (similar to issue discussed at October 1, 2007 meeting)

Measurement of liabilities

Applicability of Statement 157 to plan assets of pensions and other postretirement benefit plans (similar to issue discussed at October 1, 2007 meeting)

Use of NAV to measure investments in fund of fund or certain investments with restrictions (similar to issue discussed at October 1, 2007 meeting)

Determining the fair value of a liability with a third-party guarantee

Highest and best use – land example

Definition of significant in determining the level in the fair value hierarchy

Accounting for Transaction Costs in Determining the Fair Value of an Investment

The issues discussed at the October 1, 2007 meeting include:

Determining the fair value of an asset in which the entity intends to transform the asset from its current form into a different form upon sale (such as whether to value a mortgage loan in the whole loan market vs. the securitization market)

Definition of an active market

Determination of the principal market when the majority of an entity’s trading activity occurs in a different market than where the majority of market participants’ trading occurs.

Highest and Best Use: Accounting for an asset that an entity does not intend to use or intends to use defensively

Determination of market participants (such as assets or entities acquired in an auction)

Assets and liabilities without markets

Pension plan disclosures

Use of net asset value to measure certain investments, such as in private equity.

The FASB staff will evaluate which, if any, of these issues to present to the Board for their consideration to add to its technical agenda. Based on the discussions and information provided by the VRG, the FASB has added several projects to its agenda to provide additional guidance to constituents. These projects address:

Determining when a market for an asset or a liability is active or inactive;

Determining when a transaction is distressed;

Applying fair value to interests in alternative investments, such as hedge funds and private equity funds; and,

Improving disclosures about fair value measurements will consider requiring additional disclosures on such matters as sensitivities of measurements to key inputs and transfers of items between the fair value measurement levels.

  • *

*Valuation Resource Group Members

Don Charles (accounting/valuation)

Ernst & Young

Frank Ciccotto

Standard and Poor’s

Brenna Wist (accounting/valuation)


Greg Forsythe (accounting/valuation)


Andreas Ohl (accounting/valuation)


Anita Ford (accounting/valuation)

Clifton Gunderson

Jolene Hart (accounting/valuation)

McGladry & Pullen

Jerry Mehm (valuation)

American Appraisal

Paul Barnes (valuation)

Duff & Phelps

Michael DeLuke (valuation)

Houlihan , Lokey, Howard & Zukin

Michael Mard (valuation)

The Financial Valuation Group

Chris Thorne (professional standard setting)

International Valuation Standards Committee

Carla Glass (valuation)

Hill, Schwartz, Spilker, Keller LLC

Amy Ripepi (accounting specialist)

Financial Reporting Advisors

Greg Ramsey (preparer)

Fannie Mae

Gina Weaver (preparer)


David Larsen (preparer – private equity)

Duff & Phelps

Gordon Goodman (preparer)

Occidental Petroleum

Wally Enman (user)

Moodys Investors Service

Shelley Luisi (observer)


Greg Scates (observer)


Hillary Eastman (observer)


Laurie Fitzpatrick Priest (observer)

Federal Reserve Board of Governors

Dan Noll (observer)

  • *


  • History and Background

In January 2007, the FASB issued an Invitation to Comment seeking views from constituents on (a) the need, if any, for valuation guidance related to the use of fair value measurements in financial reporting, (b) who should be involved in developing any such valuation guidance, and (c) the process and form of any such guidance-setting activities. Over 80 comment letters were received and posted to the FASB website. Additionally, the Board held a Public Roundtable on April 30, 2007 to enable constituents to elaborate on and discuss the issues raised in the Invitation to Comment. The Board issued a press release on June 21, 2007 announcing the formation of a resource group to address issues relating to valuation for financial reporting. The resource group has met on October 1, 2007, November 9, 2007, February 1, 2008, May 8, 2008, September 23, 2008, and February 5, 2009 to discuss issues surrounding the implementation of FASB Statement No. 157, Fair Value Measurements.

Contact Information

Kristofer Anderson
Valuation Fellow

Meghan Clark
Postgraduate Technical Assistant


  • **

My note –

So, while Sarkozy and Merkel are insisting on intelligent redesign of the regulations and transparency that will fix this mess which was directly caused by the lack of them, our Congressional and business leaders have succeeded in making a mockery of them and the entire G20 efforts by having the mark-to-market rule changed back to fantasy accounting.

On This Morning – 04-02-09, the Financial Accounting Standards Board, (FASB) will be changing the mark-to-market rule into something that no longer resembles reality once again by allowing bankers and others to use their own “significant judgment” in determining values for accounting purposes.

– cricketdiane, 04-02-09


  • **