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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.]
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=atGP3JkZcwVE
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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
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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]
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Financial Accounting Standards Advisory Council
MEMBERS AS OF JANUARY 2009
Mr. Dennis H. Chookaszian
Chairman
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
Partner
KPMG LLP
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
Professor
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
Director
State of New Jersey
Division of Investment
Mr. Vincent P. Colman
U.S. National Office Professional Practice Leader
PricewaterhouseCoopers
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
Covidien
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
Controller
CNOOC Limited
Mr. John B. Morse, Jr.
Vice President—Finance, Chief Financial Officer
The Washington Post Company
Mr. George Muñoz
Principal
Muñoz Investment Banking Group
Mr. Joel S. Osnoss
Partner
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
UBS AG
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
http://www.fasb.org/fasac/fasacmem.shtml
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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
President
O’Dell Valuation Consulting, LLC
Charles Bramley
Partner
Briggs Bunting & Dougherty
Daryl Buck
Vice President and CFO
Reasor’s, Inc
John R. Burzenski
President
Burzenski & Company
Michael Cain
Senior Executive Vice President
Frost Bank
Thomas J. Groskopf
Director
Barnes Dennig
Mary Ann Lawrence
Senior Vice President
Key Corporation
David Lomax
Area Underwriting Manager
Liberty Mutual Surety
Jerry Murphy
CFO
Todd and Sargent Inc
Chris A. Rogers
Vice President of Finance and Administration
Infragistics, Inc.
Steven A. Shelton
Partner
Way, Ray, Shelton and Company
James K. Smith
Vice President and CFO
Phonon Corporation
James Stevenson
CFO
ABS Capital Partners
http://www.fasb.org/private_company_financial_reporting_committee/pcfrc_members.shtml
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Financial Crisis Advisory Group (FCAG)
CO-CHAIRS
Harvey J. Goldschmid
Former Commissioner, United States Securities and Exchange Commission
United States
Hans Hoogervorst
Chairman, AFM (the Netherlands Authority for the Financial Markets)
Europe
MEMBERS
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
Argentina
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
Japan
Nobuo Inaba
Former Executive Director, Bank of Japan
Japan
Gene Ludwig
Former Comptroller of the Currency
United States
Yezdi Malegam
Board Member, National Reserve Bank of India
India
Klaus-Peter Müller
Chairman of the Supervisory Board, Commerzbank
Germany
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
Italy
Lucas Papademos
Vice-President, European Central Bank
Europe
Michel Prada
Former Chairman, Autorité des marchés financiers
France
OBSERVERS:
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
http://www.fasb.org/fcag/fcag_members.shtml
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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
http://www.fasb.org/investor_task_force/
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Financial Accounting Standards Board
Investors Technical Advisory Committee Members
Members As Of January 2009
Neri Bukspan
Chief Accountant
Standard & Poor’s
Jack Ciesielski
President
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
http://www.fasb.org/investors_technical_advisory_committee/itac_members.shtml
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Small Business Advisory Committee Members
Mr. P. Glenn Bradley
Partner
Chilton & Medley PLC
Mr. Gary M. Cademartori
Partner
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.
Treasurer
Cold Spring Construction Company, Inc.
Mr. Richard H. Gesseck
Partner
UHY LLP
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
Partner
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
Principal
Steinberg Enterprises, LLC
Mr. Troy D. Templeton
Partner & Chief Operating Officer
Trivest Partners
Mr. E. Anson Thrower
Partner
NaviscentGroup
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
http://www.fasb.org/small_business_advisory_committee/sbac_members.shtml
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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
Veritasetlux
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
Director
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
AFL-CIO
Ms. Rita Spitz
Principal
William Blair & Company, LLC
Mr. James Wei
Private Investor
Ms. Christianna (Christy) Wood
Chief Executive Officer
Capital Z Asset Management
http://www.fasb.org/user_advisory_council/uac_members.shtml
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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.
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*Valuation Resource Group Members
Don Charles (accounting/valuation)
Ernst & Young
Frank Ciccotto
Standard and Poor’s
Brenna Wist (accounting/valuation)
KPMG
Greg Forsythe (accounting/valuation)
Deloitte
Andreas Ohl (accounting/valuation)
PricewaterhouseCoopers
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)
Pfizer
David Larsen (preparer – private equity)
Duff & Phelps
Gordon Goodman (preparer)
Occidental Petroleum
Wally Enman (user)
Moodys Investors Service
Shelley Luisi (observer)
SEC
Greg Scates (observer)
PCAOB
Hillary Eastman (observer)
IASB
Laurie Fitzpatrick Priest (observer)
Federal Reserve Board of Governors
Dan Noll (observer)
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AICPA
- 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
keanderson@fasb.org
Meghan Clark
Postgraduate Technical Assistant
mmclark@fasb.org
http://www.fasb.org/project/valuation_resource_group.shtml
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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
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