FEI Asks FASB To Delay Effective Date of FAS 157 By One Year

October 1, 2007

FEI Summary

In a comment letter filed Oct. 1, 2007, FEI’s Committee on Corporate Reporting (CCR) and Small Public Company Task Force (SPCTF) asked the Financial Accounting Standards Board (FASB) to delay the effective date of FAS 157, “Fair Value Measurement,” by one year.

Opening by commending FASB for its recent decision to scope out FAS 13 (leasing) from FAS 157 (see related FEI summary), the FEI committees’ letter states: “Based on our thorough study of the impact of FAS 157 on lease accounting, we believe that is the only feasible outcome.”

However, the letter adds: “We believe that the interaction between lease accounting and FAS 157 is, however, representative of broader issues with the application of the standard to assets and liabilities for which active markets do not exist.”

The letter, co-signed by CCR Chairman Arnold C. Hanish, and SPCTF Chairperson Karen Rasmussen, provided detailed reasons why the FEI committees were "requesting that the Board also amend FAS 157 to delay the required effective date of the standard by one year.”

“We believe that this one-year deferral is necessary in order to resolve the growing number of implementation issues and to enable companies to be in a position to fully comply with the requirements of the standard,” said the letter.

See the comment letter for further details.

UPDATE: FASB announced on October 11 that it will discuss at its October 17 board meeting the agenda request made by FEI and others (including IMA) whether to delay the effective date of FAS 157.

UPDATED Oct. 15, 2007 by Edith Orenstein, Director of Technical Policy Analysis, Financial Executives International (FEI). This summary does not represent FEI opinion unless specifically noted above.