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FASB Invitation to Comment: "Selected Issues Related to Assets and Liabilities with Uncertainties"

Thursday, January 5, 2006

The Financial Reporting Committee of the Institute of Management Accountants is writing to provide its views on the Financial Accounting Standard Board’s (FASB) Invitation to Comment, Selected Issues Related to Assets and Liabilities with Uncertainties. The financial reporting ramifications of the changes proposed by this project are fundamental – requiring broad changes to financial reporting processes, auditing standards and financial analysis. Importantly, we do not believe its application results in an improvement in financial reporting. As has been expressed in previous comment letters and discussions, we continue to struggle with an approach in which probability, a key component of the existing recognition principles, is effectively abandoned as a recognition trigger and only factored into the resulting measurement. The attached Exhibit 1 addresses each of the questions posed in the Invitation to Comment. The comments below represent our views on some of the more significant issues.

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