Editing Financial Accounting Standards Board (section)

== Accounting standards ==
=== Credit losses ===
On June 16, 2016, the FASB issued an ASU that improves financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The ASU also amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration, and requires enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization's portfolio.<ref name="CLR">{{cite web|title=What is Credit Loss Ratio? definition and meaning|url=http://www.investorwords.com/12005/credit_loss_ratio.html|website=InvestorWords.com|access-date=1 November 2017}}</ref>

=== Variable interest entities ===
Under the new standard, the decision whether to consolidate is determined by two factors: a company's design and intention and a parent company's ability to direct that organization's actions in a way that significantly impacts its economic performance.<ref name="JoA">{{cite web|title=FASB Issues Standards on Securitizations, SPEs|url=http://www.journalofaccountancy.com/news/2009/jun/20091801.html|website=Journal of Accountancy|access-date=1 November 2017|date=12 June 2009}}</ref>

=== Pensions ===
In late 2006, the FASB issued ''Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans'' (statement 158). Under this update, if a pension or other post-retirement plan is overfunded, a company must recognize that overfunded amount as an asset, which can be reduced later if the plan becomes underfunded. Conversely, if a plan is underfunded, a company must recognize that underfunded amount as a liability, which can be reduced if a plan's funding increases in a period.  These asset or liability determinations are recognized at the employer's year end in the same year that the plan funding takes place.<ref name="Pensions">{{cite web|title=FASB Improves Employer Pension & Postretirement Plan Accounting|url=https://www.accountingweb.com/practice/practice-excellence/fasb-improves-employer-pension-postretirement-plan-accounting|website=AccountingWEB|access-date=1 November 2017|language=en-gb|date=4 October 2006}}</ref>

These enhancements were made in order to provide employees, investors, retirees, and users of financial statements more complete information about the status of a pension or other post-retirement plan, which is used to make informed decisions about organizations capabilities to fulfill plan obligations.<ref name="Pensions" />

=== Stock options ===
The FASB issued a statement on ''Share Based Payments'' (statement 123(R)) in 2004, developed jointly with the IASB.<ref name="123(R)">{{cite web|title=FAS 123 (Revised 2004) (as issued)|url=http://www.fasb.org/jsp/FASB/Document_C/DocumentPage?cid=1218220124271&acceptedDisclaimer=true|website=www.fasb.org|access-date=26 April 2018|page=iii}}</ref> This standard update requires companies to identify the cost of share-based payments (e.g., restricted share plans, employee share purchase plans, performance-based awards, share appreciation rights, and stock options) within their financials.<ref name="123(R)"/> The FASB updated this reporting standard with the goal of improving comparability, relevance and reliability of financial information.<ref name="Expense options">{{cite web|title=FASB: Companies Must Expense Options|url=https://www.accountingweb.com/practice/practice-excellence/fasb-companies-must-expense-options|website=AccountingWEB|access-date=1 November 2017|language=en-gb|date=17 December 2004}}</ref>

=== Leases (balance sheet) ===
In February 2016, the FASB issued a new Leases standard, to improve financial reporting about leasing transactions. The new standard requires organizations to include lease obligations on their balance sheets, and affects all companies and other organizations that lease assets.<ref name="lease">{{cite web|last1=Bramwell|first1=Jason|title=The Wait is Over: FASB Issues New Guidance on Lease Accounting|url=https://www.accountingweb.com/aa/standards/the-wait-is-over-fasb-issues-new-guidance-on-lease-accounting|website=AccountingWEB|access-date=1 November 2017|language=en|date=25 February 2016}}</ref>

=== Derivative accounting ===
Upon electing to use hedge accounting, companies must establish a method to evaluate the effectiveness of hedging a derivative, and a method to determine the ineffectiveness of a hedge.<ref name="riskex">{{cite web|title=FAS 133 Summary – Advisors on Derivatives & Hedge Accounting for the Energy Sector ~ Disclosure Compliance FAS 133 Consultants. Summary FAS 133 hedge effectiveness testing consulting. Overview Embedded Derivatives Basis Hedging IAS 39 Training Consultant. Mark-to-market accounting, Interest Rates, FAS 133 Foreign Exchange Currency FX|url=http://riskex.com/fas133-summary.htm|website=riskex.com|access-date=1 November 2017}}</ref> The FASB further improved derivative accounting in 2017 with simplification measures included in ASU 2017–12.<ref name="ASU 2017-12">{{cite news|title=Tax & Accounting Update|url=https://www.cpajournal.com/2018/04/23/tax-accounting-update-17/|access-date=26 April 2018|work=The CPA Journal|date=23 April 2018}}</ref>