The American Institute of Certified Public Accountants (AICPA) has issued a proposed practice aid for entities engaged in mortgage banking activities and is seeking comments on the draft document.

The practice aid is entitled Derivative Loan Commitments Task Force Illustrative Disclosures on Derivative Loan Commitments and is intended to be used by both U.S. Securities and Exchange Commission (SEC) registrants and non-registrants.

The practice aid includes examples of illustrative disclosures for each of the requirements cited in SEC Staff Accounting Bulletin (SAB) No. 105, Application of Accounting Principles to Loan Commitments. Disclosures in the practice aid include registrants’ methods and assumptions used to estimate the fair values of derivative loan commitments and any associated hedging strategies. The provisions of SAB 105 must be applied to loan commitments accounted for as derivatives that were entered into after March 31, 2004.

The proposed practice aid is intended to provide “best practices” and is not authoritative. It is available on the AICPA’s Web site for a short informal comment period.