FASB response to SEC on off-balance-sheet items
17 Feb 2006
The US Financial Accounting Standards Board has submitted its response to the SEC Staff Report on Off-Balance Sheet Arrangements, Special Purpose Entities, and Related Issues released by the US Securities and Exchange Commission in June 2005. The SEC report was prepared pursuant to the Sarbanes-Oxley Act of 2002 and was submitted to the President and several Congressional committees.
The SEC staff report includes an analysis of the filings of issuers as well as an analysis of pertinent US generally accepted accounting principles and Commission disclosure rules. The report contains several recommendations for potentially sweeping changes in current accounting and reporting requirements for pensions, leases, financial instruments, and consolidation:
FASB's response discusses a number of "fundamental structural, institutional, cultural, and behavioral forces" that it believes cause complexity and impede transparent financial reporting. FASB provides an update on its activities and projects intended to address and improve outdated, overly complex accounting standards. These areas include accounting for leases; accounting for pensions and other post employment benefits; consolidation policies; accounting for financial instruments; accounting for intangible assets; and conceptual and disclosure frameworks. The FASB also identifies several other initiatives aimed at improving the understandability, consistency, and overall usability of existing accounting literature, through codification, by attempting to stem the proliferation of new pronouncements emanating from multiple sources, and by developing new standards in a 'principles-based' or 'objectives-oriented' approach. Click to download:
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