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FASB's Opts Not to Add Qualitative Disclosures on Going Concern - For Now - As Board Prepares ED on Disclosure of Liquidity, Interest Rate Risk

As reported last week by Ken Tysiac in the AICPA's Journal of Accountancy:

FASB decided Wednesday that it will not require qualitative disclosures about an entity’s ability to remain a going concern that would supplement the proposed quantitative disclosures about liquidity risks.
 
As further described by Tysiac, and more specifically as described in FASB's Summary of Board Decisions [emphasis added]:

The Board decided not to require qualitative disclosures related to an entity’s ability to remain a going concern that would supplement the proposed quantitative disclosures about liquidity risks

The basis for that decision was that meeting the additional informational needs of users with respect to the topic of an entity’s ability to remain a going concern would likely require a collaborative effort of the FASB and other organizations that possess the interest and means to provide the most effective solution.
 
Encompassing this most recent decision, the board directed the staff to proceed with a 'ballot draft' of a proposed Accounting Standards Update (to be released for public comment in the form of an Exposure Draft or ED) on disclosures about liquidity and interest rate risk. As described by FASB, the board also decided: 
  • transition: the board will propose that entities apply the new requirements prospectively with ongoing comparative disclosures after the period of initial adoption
  • effective date: the board will not specify a proposed effective date in the Exposure Draft, but will instead invite comment on this point
  • comment period: there will be a 90-day comment period on this ED.  
Additional background can be found in the minutes of the board's Sept. 7, 2011 board meeting (except for the qualitative information which the board decided at last week's meeting to exclude from the upcoming ED) 

Financial Instruments in Focus at this week's FASB-IASB Board Meeting
In other FASB-related news, see Financial Instruments in Focus at FASB, IASB. Financial Instruments is one among a number of topics being taken up at this week's joint FASB-IASB board meeting, along with Investment Entities and Insurance Contracts. 
Posted: 4/16/2012 2:42:53 PM by Edith Orenstein | with 0 comments
Filed under: Going Concern,interest rate risk,liquidity and interest rate risk,liquidity risk,FASB


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Edith Orenstein