Proposed FASB Accounting Changes Aimed at Credit Card Issuers

The Financial Accounting Standards Board (FASB), the standards-making body for the accounting profession, is considering making changes to its rules for disclosure of certain loss contingencies in a move that Business Week reports that is aimed at credit card issuers that rely on off-balance sheet trusts, according to a report in today’s Wall Street Journal.

Last month FASB issued an Exposure Draft of a proposed Statement of Financial Accounting Standards, Disclosure of Certain Loss Contingencies—an amendment of FASB Statements No. 5 and 141. The proposed Statement would be effective for fiscal years ending after December 15, 2008, and interim and annual periods in subsequent fiscal years.

Interested parties can make comments on the exposure draft until Sept. 29. FASB will consider those comments before making any changes to the current rules.

In the exposure draft, FASB calls for financial reporting that is broad enough “to encompass all the decisions that equity investors, lenders and other creditors make in their capacity as capital providers, including resource allocation decisions as well as decisions made to protect and enhance their investments.”

The exposure draft also calls for the financial reporting to provide relevance and faithful representation of fundamental qualitative characteristics, along with comparability, verifiability and understandability of the qualitative characteristics.

Off-balance sheet trusts are complex in nature and the reporting of these activities may have to be changed if new account rules are adopted.