Financial Reporting

  FASB issued Accounting Standards Update (ASU) no. 2010-20, Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses, which FASB said in a press release will improve transparency in financial reporting by public and nonpublic companies that hold financing receivables, which include loans, lease receivables and other long-term receivables.


“The global financial crisis highlighted the need for additional information about a company’s financial instruments, including loans and other financing receivables,” FASB Chairman Robert Herz said in the release.


The ASU requires companies to provide more information in their disclosures about the credit quality of their financing receivables and the credit reserves held against them.


FASB said this additional information will assist financial statement users in assessing an entity’s credit risk exposures and evaluating the adequacy of its allowance for credit losses. The ASU says that the current high threshold for recognition of credit impairments impedes timely recognition of losses. FASB recently issued an exposure draft of a proposed ASU, Accounting for Financial Instruments and Revisions to the Accounting for Derivative Instruments and Hedging Activities: Financial Instruments (Topic 825) and Derivatives and Hedging (Topic 815), that would remove that threshold.


The additional disclosures required under ASU 2010-20 for financing receivables include:


  • Aging of past-due receivables,
  • Credit quality indicators, and
  • Modifications of financing receivables.


The ASU requires a company to disaggregate new and existing disclosures based on how it develops its allowance for credit losses and how it manages credit exposures.


Short-term accounts receivable, receivables measured at fair value or lower of cost or fair value, and debt securities are exempt from the ASU.


For public companies, the amendments that require disclosures as of the end of a reporting period are effective for periods ending on or after Dec. 15, 2010. The amendments that require disclosures about activity that occurs during a reporting period are effective for periods beginning on or after Dec. 15, 2010. For nonpublic companies, the amendments are effective for periods ending on or after Dec. 15, 2011.


ASU 2010-20 is available at



  An international committee formed Aug. 2 by the Prince of Wales’ Accounting for Sustainability Project (A4S) and the Global Reporting Initiative (GRI) will work to integrate the way companies report on strategy, risk, governance, financial performance and sustainability.


The International Integrated Reporting Committee (IIRC), whose high-profile members include the heads of FASB, the International Accounting Standards Board (IASB), the International Federation of Accountants (IFAC), each of the Big Four firms, representatives of some of the world’s largest institutional investors and governance organizations, is the result of a decision made last December at a meeting of more than 20 organizations including the AICPA to form a committee that would oversee development of an integrated reporting model.


The organizations agreed that part of the problem in reporting on sustainability issues is that numerous organizations are developing standards but no single organization is coordinating the efforts.


“The intention is to help with the development of more comprehensive and comprehensible information about an organization’s total performance, prospective as well as retrospective, to meet the needs of the emerging, more sustainable, global economic model,” the A4S and the GRI said in a joint press release.


“The case for globally consistent financial reporting standards is well understood and accepted,” said IASB Chairman Sir David Tweedie in the press release. “It is appropriate to apply the same global approach to other aspects of corporate reporting. This initiative represents an important step on that journey.”


“The goal of the IIRC is not to increase the reporting burden on companies and other entities,” said IFAC CEO Ian Ball. “Rather, it is to help them and all their stakeholders make better resource allocation decisions. All of us have a stake in a sustainable society. While integrated reporting alone cannot ensure sustainability, it is a powerful mechanism to help us all make better decisions about the resources we consume and the lives we lead.”


More information on the IIRC is available at



  The Financial Accounting Foundation (FAF) announced it has joined the social media network Twitter to enhance and expand its communication outreach with constituents. The organizations for which FAF has oversight, FASB and GASB, will also be included in the new outreach. Constituents interested in following important news and information about FAF, FASB and GASB via Twitter can enroll at Click on the Twitter logo on the bottom left of the home page.


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