BIG FOUR FIRMS SUPPORT RECOMMENDATIONS ON BANK DISCLOSURES Big Four accounting firms welcomed an international task force’s October 2012 set of recommendations on improving bank risk disclosures. The recommendations, issued by the Financial Stability Forum's Enhanced Disclosure Task Force, are designed to clarify what risks banks are taking and make disclosures more timely. The recommendations aim to make it easier for investors and analysts to compare information among banks. The task force was formed in May at the urging of the Financial Stability Board. Its predecessor, the Financial Stability Forum, recommended improving disclosures about structured credit products and other instruments that caused bank losses during the financial crisis. (See International Task Force Makes Recommendations on Bank Disclosures in the November 5, 2012, edition of Accounting & Compliance Alert.) The FSB is an international panel of central bankers, senior finance ministry officials, and market regulators. The U.S. members are the Federal Reserve, the Treasury Department, and the SEC. PricewaterhouseCoopers LLP in its comment letter on the proposal said the task force recommendations were useful and that it would look into any practical challenges of preparing the recommended disclosures. "One of the key challenges that we have faced since the financial crisis, is how to rebuild trust in our financial institutions. The recommendations of the EDTF are a significant step towards restoring confidence in the banking industry and we look forward to working with other stakeholders to turn these recommendations into pragmatic solutions,“ said Dennis Nally, chairman of PwC International. Other Big four firms, Ernst & Young LLP, KPMG LLP, and Deloitte Touche Tohmatsu Limited said they supported the recommendations. The task force's work took place as many regulated banks have been considering the FASB's draft of required disclosures about financial risks. In June, the FASB issued Proposed Accounting Standards Update (ASU) No. 2012-200Financial Instruments (Topic 825) Disclosures about Liquidity Risk and Interest Rate Risk. The proposal aims to give a clearer picture about a business's ability to raise short-term cash and borrow funds by requiring companies to disclose the information in their financial statement footnotes. Financial institutions would have the added requirement of explaining how changes in interest rates will affect the financial instruments on their balance sheets. They would also have to show how interest rate changes would affect earnings and capital. “We are pleased that other organizations are looking to improve the information regarding risk that is available to investors and other financial statement users,” said FASB Chairman Leslie Seidman.

Big four firms support recommendations on bank disclosures

Download PDF Report

Upload
barbara-hose
View
63
Download
3

Embed Size (px)

DESCRIPTION

The Financial Stability Forum, recommended improving disclosures about structured credit products and other instruments that caused bank losses during the financial crisis. PricewaterhouseCoopers LLP in its comment letter on the proposal said the task force recommendations were useful and that it would look into any practical challenges of preparing the recommended disclosures.

Citation preview

BIG FOUR FIRMS SUPPORT RECOMMENDATIONS ON BANK DISCLOSURES

Big Four accounting firms welcomed an international task force’s October 2012 set of recommendations on improving bank risk disclosures.

The recommendations, issued by the Financial Stability Forum's Enhanced Disclosure Task Force, are designed to clarify what risks banks are taking and make disclosures more timely. The recommendations aim to make it easier for investors and analysts to compare information among banks.

The task force was formed in May at the urging of the Financial Stability Board. Its predecessor, the Financial Stability Forum, recommended improving disclosures about structured credit products and other instruments that caused bank losses during the financial crisis. (See International Task Force Makes Recommendations on Bank Disclosures in the November 5, 2012, edition of Accounting & Compliance Alert.)

The FSB is an international panel of central bankers, senior finance ministry officials, and market regulators. The U.S. members are the Federal Reserve, the Treasury Department, and the SEC.

PricewaterhouseCoopers LLP in its comment letter on the proposal said the task force recommendations were useful and that it would look into any practical challenges of preparing the recommended disclosures.

"One of the key challenges that we have faced since the financial crisis, is how to rebuild trust in our financial institutions. The recommendations of the EDTF are a significant step towards restoring confidence in the banking industry and we look forward to working with other stakeholders to turn these recommendations into pragmatic solutions,“ said Dennis Nally, chairman of PwC International.

Other Big four firms, Ernst & Young LLP, KPMG LLP, and Deloitte Touche Tohmatsu Limited said they supported the recommendations.

The task force's work took place as many regulated banks have been considering the FASB's draft of required disclosures about financial risks.

In June, the FASB issued Proposed Accounting Standards Update (ASU) No. 2012-200Financial Instruments (Topic 825) Disclosures about Liquidity Risk and Interest Rate Risk.

The proposal aims to give a clearer picture about a business's ability to raise short-term cash and borrow funds by requiring companies to disclose the information in their financial statement footnotes. Financial institutions would have the added requirement of explaining how changes in interest rates will affect the financial instruments on their balance sheets. They would also have to show how interest rate changes would affect earnings and capital.

“We are pleased that other organizations are looking to improve the information regarding risk that is available to investors and other financial statement users,” said FASB Chairman Leslie Seidman.

Page 2: Big four firms support recommendations on bank disclosures

“The FASB will consider the EDTF report, along with other stakeholder feedback, as part of our due process in determining how to move forward with our effort in enhancing risk disclosures.”

The IASB said it complemented its own efforts to enhance comparability and usefulness of financial statements. The board said it will consider the EDTF recommendations as it develops new financial reporting disclosure principles.

Thomson Reuters Checkpoint Alert December 12, 2012