October 19, 2021

A Mountain of Hate Mail Gets FASB to Backtrack on Fair Value

If the drinks at Davos weren’t already free, we’re pretty sure Stephen Schwarzman would be buying.

From the Journal’s man on the accounting beat, Michael Rapoport:

Accounting rule makers took a key step Tuesday to reverse a proposal that would have required banks to value their loans based on the ups and downs of the market. The Financial Accounting Standards Board agreed that companies could continue to carry a variety of financial assets and liabilities at amortized cost, an adjusted version of their original cost, as they do now. That would reverse a proposal the board introduced last May that would have required bank loans and other financial assets to be carried at “fair value,” based on market prices.

What happened, you ask? What caused the FASB to fold like a cheap lawn chair? Remember all those nastygrams that were sent to Bob Herz? It sounds like the FASB took those personally:

FASB indicated the overwhelmingly negative reaction to its proposal, from companies and investors alike, played a big role in prompting the board to change its mind. The board received more than 2,800 comment letters on its fair-value proposal, most of them opposed to the move, and heard more opposition at a series of public roundtables before it began reconsideration of its proposal for fair-value changes.

So the bankers win this round. Oh, wait…they win every round.

Accounting Board Backs Off ‘Mark to Market’ Push [WSJ]

If the drinks at Davos weren't already free, we're pretty sure Stephen Schwarzman would be buying. From the Journal's man on the accounting beat, Michael Rapoport:

Accounting rule makers took a key step Tuesday to reverse a proposal that would have required banks to value their loans based on the ups and downs of the market. The Financial Accounting Standards Board agreed that companies could continue to carry a variety of financial assets and liabilities at amortized cost, an adjusted version of their original cost, as they do now. That would reverse a proposal the board introduced last May that would have required bank loans and other financial assets to be carried at "fair value," based on market prices.

What happened, you ask? What caused the FASB to fold like a cheap lawn chair? Remember all those nastygrams that were sent to Bob Herz? It sounds like the FASB took those personally:

FASB indicated the overwhelmingly negative reaction to its proposal, from companies and investors alike, played a big role in prompting the board to change its mind. The board received more than 2,800 comment letters on its fair-value proposal, most of them opposed to the move, and heard more opposition at a series of public roundtables before it began reconsideration of its proposal for fair-value changes.

So the bankers win this round. Oh, wait…they win every round.

Accounting Board Backs Off 'Mark to Market' Push [WSJ]

Latest Accounting Jobs--Apply Now:

Have something to add to this story? Give us a shout by email, Twitter, or text/call the tipline at 202-505-8885. As always, all tips are anonymous.

Related articles

Friday Footnotes: Deloitte Sued; RSM Sued; PwC Not Sued But Incompetent | 10.15.21

‘What do you actually do?’: Redditors scratch heads at consulting firms [Yahoo News] We’ve often wondered about this too. Deloitte Workers Sue Over ‘Astronomical’ 401(k) Fees [Law360] Deloitte workers slapped the accounting giant with a proposed class action in New York federal court, claiming the company allowed two multibillion-dollar retirement plans to get saddled with […]

[UPDATED] PwC Australia Diversity and Inclusion Manager Who Mocked Chinese Accents Had to Be Told You Aren’t Supposed to Mock Chinese Accents

[Updated original post from Sept. 28 with additional information on PwC Australia’s internal investigation. Update is at the bottom of this article.] Australian Financial Review has a blockbuster of an exclusive this morning, one that involves “a human resources executive dressed as a bat from Wuhan” and a senior manager of diversity and inclusion mocking […]