The Financial Accounting Standards Board has proposed a new accounting standard to require companies to explain more to investors about where companies may face risks due to liquidity or interest rates.
The proposed Accounting Standards Update is intended to draw out disclosures about exposures to certain risks related to financial assets, liabilities, obligations, and other financial instruments, with a special focus on disclosures around potential problems with liquidity and interest rate changes. Those are two of the big risks that emerged during the financial crisis and continue to figure prominently for many organizations on an ongoing basis, said FASB member Marc Seigel in a podcast explaining the proposal. The board addressed disclosures about credit risk earlier in a 2010 update to accounting standards to call for more disclosures about the credit quality of financing receivables and the allowance for credit losses.
