The Financial Accounting Standards Board (FASB) has proposed changing the mark-to-market rules that many professionals have pinpointed as the reason that mortgage-backed securities write-downs have become so severe.
Mark-to-market accounting, implemented after Enron and other accounting scandals, has caused assets in illiquid markets to be priced too low, critics say. Based on mark-to-market rules, assets are priced at the amount they would fetch today, rather than the price they may have received historically. The FASB's proposed changes would allow firms the flexibility to price assets based on more normal circumstances.
Revised rules, if approved, may be applicable for companies' first-quarter financial results, according to an investors.com report.
The FASB released a Proposed Statement of Financial Accounting Standards, which can be viewed at www.fasb.org. The board plans to vote on the proposal April 2, after a 15-day comment period closes.
SOURCE: Investors.com, FASB