FASB: market values must be disclosed - Financial Accounting Standards Board

Healthcare Financial Management, Feb, 1992

The Financial Accounting Standards Board (FASB) has adopted a rule requiring disclosure, in footnotes to the general purpose financial report, of the current value of all financial instruments, including investment, receivables, and debt. The rule has been strongly opposed by banks, which contend that determining the current value of aU their loans will be unreasonably burdensome and of doubtful accuracy and usefulness. The Securities and Exchange Commission (SEC), on the other hand, has strongly urged FASB to adopt this rule and has hinted that if FASB did not act, the SEC would impose such a rule on publicly traded organizations.

In 1980, HFMA's Principles and Practices (P&P) Board in its Statement No. 3 urged experimentation with disclosures of the effect of inflation on financial condition. The P&P Board statement foamed on the effect of inflation on plant capital, which is not addressed by the new FASB rule.

The new FASB rule will apply to financial statements for years ending at the end of 1992 or later, with an additional three years allowed for implementation by organizations with assets of less than $150 million.