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FASB Exposure Draft: "The Fair Value Option for Financial Assets and Liabilities"

Sunday, April 23, 2006

The Financial Reporting Committee of the Institute of Management Accountants appreciates the opportunity to provide its views on the Exposure Draft, The Fair Value Option for Financial Assets and Liabilities. The FRC supports the ED as we believe that the elective accounting provided would be beneficial to certain financial institutions in addressing the anomalous results associated with the mixed attribute model and obviating hedge accounting for those entities in a number of common scenarios. However, we also observe that there are a great many issues that continue to exist with accounting for derivatives and hedging activities that are not addressed by this ED and will not be solved in phase 2 of the project. We therefore request that the Board make additions to its limited scope project to address certain issues that exist with FAS 133. Our detailed comments on each of these matters are provided below.

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