FASB on Troubled Debt; Congress on Troubling Accounting
Last week saw the issuance by FASB of a new standard on troubled debt restructurings, and a Congressional hearing on accounting and auditing issues that some members of Congress found troubling. The FASB standard was issued on Tuesday in the form of Accounting Standards Update (ASU) No. 2011-02: Receivables (Topic 310): A Creditor's Determination of Whether a Restructuring is a Troubled Debt Restructuring. As noted in FASB's press release and a related FASB in Focus:
For public companies, the new guidance is effective for the first interim or annual period beginning on or after June 15, 2011, and should be applied retrospectively to the beginning of the annual period of adoption. As a result of applying these amendments, an entity may indentify receivables that are newly considered impaired. For purposes of measuring impairment of those receivables, an entity should apply the amendments prospectively for the first interim or annual period beginning on or after June 15, 2011. For nonpublic entities, it is effective for annual periods ending on or after December 15, 2012, including interim periods within those annual periods. Early adoption is permitted for public and nonpublic entities.
The Congressional hearing on accounting and auditing, which also took place last week, was convened by the Senate Banking Committee's Subcommittee on Securities, Insurance and Investment. Entitled "The Role of the Accounting Profession in Preventing Another Financial Crisis," panelists at the hearing included FASB Chairman Leslie Seidman, SEC Chief Accountant Jim Kroeker, PCAOB Chairman Jim Doty, Anton Valukas (Examiner in the Lehman Bankruptcy proceeding), former SEC Chief Accountant Lynn E. Turner, Center for Audit Quality (CAQ) Executive Director Cyndi Fornelli, and U.S. Chamber of Commerce Center for Capital Market Competitiveness VP Tom Quaadman. Click on the link to the hearing to view the archived webcast, and links to testimony.
See links to additional coverage of the hearing here.