Under the old FAS 130, companies weren't required to present the double bottom line on the face of the financials, only to disclose changes in fair value in the footnotes. In fact, OCI was often relegated to "changes to shareholder's equity" and considered separately from net income. In response to calls for more transparency, FASB has assigned new prominence to OCI that should help investors, as well as potential buyers, track the effect of fair-value changes on total comprehensive income, which includes net income and OCI.
Earlier this week, IASB Chairman David Tweedie announced to a group of European finance ministers that the first phase of the board's financial instrument rules would be ready by November. "The final standard will likely result in financial institutions that undertake traditional banking activities of raising deposits and making basic loans applying less fair-value accounting rather than more," asserted Tweedie. Indeed, with the new rule, IASB is introducing a risk-weighted use of fair value, in that the more risk inherent in the financial instrument, the more likely a bank will be required to use fair-value accounting to record changes in the instrument's worth.
FASB's proposed rule on classification and measurement will likely be released for public comment early next year, if not sooner.
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