In August, the Financial Accounting Standards Board (FASB) issued a revised Exposure Draft, Accounting for Transfers of Financial Assets. The proposed Statement seeks to clarify the derecognition requirements for financial assets that were developed initially in FASB Statement No. 125, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, and revised in Statement 140, and to change and simplify the initial measurement of interests related to transferred financial assets that are held by a transferor. The proposed changes principally apply to securitizations and loan participations.

The Board issued two additional Exposure Drafts, Accounting for Servicing of Financial Assets, and Accounting for Certain Hybrid Financial Instruments. Both Exposure Drafts provide optional accounting treatments that would simplify the accounting in these complex areas.

All three proposed Statements would amend Statement 140. The Exposure Draft on certain hybrid financial instruments also would amend FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities.

For more details, read the full press release or access all three exposure drafts on the FASB web site. The comment deadline for the Exposure Drafts is Monday, October 10, 2005.

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