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Fair Value Options Project

Tuesday, March 27, 2007

The FASB is considering whether to permit entities a one-time election to report certain financial and some nonfinancial instruments at fair value with the changes in fair value included in earnings. An exposure draft related to this topic was issued during January 2006. The exposure draft proposes to amend FASB Statement No. 115, "Accounting for Certain Investments in Debt and Equity Securities", to require that securities reported at fair value in accordance with Statement # 115 satisfies the financial statement presentation requirement. A comment letter was issued by the FRC on behalf of IMA addressing issues raised in the exposure draft. The comment letter was issued on April 23, 2006.

The FASB hosted a roundtable discussion at its headquarters on June 19, 2006 to discuss issues addressed in constituents' comment letters about the exposure draft. Linda Devonish- Mills, CPA, IMA's new Director of Professional Advocacy observed the roundtable.

The FASB issued FAS #159, “The Fair Value Option for Financial Assets and Liabilities” on February 15, 2007. A copy of the standard can be found on the FASB website at www.fasb.org. Once on the FASB home page, proceed to click on Pronouncements & EITF abstracts on the left hand side of the page. Look for the reference of FASB Standard No. 159.

Quotes from Albert King, Vice Chairman of Marshall & Stevens and member of IMA’s Financial Reporting Committee, appeared in an article that appears in the March 27, 2007 edition of Compliance Week about the Financial Accounting Standards Board’s issuance of FAS # 159, “Fair Value Option”. The name of the article is “Markets Cautiously Optimistic on Fair-Value Option", which can be found at www.complianceweek.com.