Examples of some of the proposals relating to the design of accounting standards and the process for setting standards include:

• Fair value reporting. The SEC should recommend that the FASB be judicious in issuing new standards and interpretations that expand the use of fair value in areas where it is not already required until (a) FASB completes a measurement framework to systematically assign measurement attributes to different types of business activities and (b) the SEC, FASB, and others develop and implement a plan to strengthen the infrastructure that supports fair value reporting.
• Financial statement presentation. The SEC should recommend that the FASB consider (a) aggregating financial statements by meaningful categories of business activities, such as the operating, investing, and financing sections and (b) developing a practical means for reconciling the statements of income and cash flows by major classes of measurement attributes.
• Disclosure. Integrate existing SEC and FASB disclosure requirements into a cohesive whole based on consistent objectives and principles.
• Disclosure of risks and judgements. Require disclosure of the principal assumptions, estimates, and sensitivity analyses that may impact a company's business, as well as a qualitative discussion of the key risks and uncertainties that could significantly change these amounts over time.
• Recognition. Recognition guidance in US GAAP should be based on a presumption that bright lines should not exist.
• General vs industry accounting standards. US GAAP should be presumptively based on business activities, rather than industries. Industry-specific standards should be rare.
• Accounting policy choices. US GAAP should be based on a presumption that formally promulgated alternative accounting policies should not exist. US GAAP should be based on a presumption that similar activities should be accounted for in a similar manner.
• Scope of standards. US GAAP should be scoped with sufficient precision to minimize the use of scope exceptions.
• Investor involvement in standards. Add more investor representation to the FASB and the Financial Accounting Foundation.
• Financial Reporting Forum (FRF). Create a Financial Reporting Forum (FRF) that includes key constituents from the preparer, auditor, and investor and other user communities, to meet with representatives from the SEC, the FASB, and the PCAOB to discuss pressures in the financial reporting system overall, both immediate and long-term, and how individual constituents are meeting these challenges. This may require the FASB to re-evaluate the roles and composition of its advisory groups or agenda committees.
• Interpretations. FASB should be the single US standards-setter for all authoritative accounting standards and interpretive implementation guidance for US GAAP. The SEC should issue only registrant-specific guidance.

This roundtable will provide the Commission with valuable insights from investors, issuers, auditors, and others about the way that both IFRS and US GAAP performed in the context of the current pressures on the marketplace. We are particularly interested in how the two sets of standards dealt with the key accounting issues in the subprime crisis, including off-balance sheet entities and fair value.

Inflation in a financial hedged item Inflation may only be hedged if changes in inflation are a contractually specified portion of cash flows of a recognised financial instrument. Therefore, where an entity acquires or issues inflation-linked debt, it has a cash flow exposure to changes in future inflation to which cash-flow hedge accounting may be applied. However, the amendment clarifies that an entity may not designate an inflation component of issued or acquired fixed-rate debt in a fair value hedge because such a component is not separately identifiable and reliably measurable. The amendments also clarify that a risk-free or benchmark interest rate portion of the fair value of a fixed-rate financial instrument will normally be separately identifiable and reliably measurable and, therefore, may be hedged.

A one-sided risk in a hedged item IAS 39 permits an entity to designate purchased options as a hedging instrument in a hedge of a financial or non-financial item. The entity may designate an option as a hedge of changes in the cash flows or fair value of a hedged item above or below a specified price or other variable (that is, a one-sided risk). The amendments make clear that the intrinsic value, not the time value, of an option reflects a one-sided risk and, therefore, an option designated in its entirety cannot be perfectly effective. The time value of a purchased option is not a component of the forecast transaction that impacts profit or loss. Therefore, if an entity designates an option in its entirety as a hedge of a one-sided risk arising from a forecast transaction, hedge ineffectiveness will arise. Alternatively, an entity may choose to exclude time value as permitted by IAS 39 to improve hedge effectiveness.