Largely in response to Fitch's critique, the Financial Accounting Standards Board formed a "Derivatives Disclosure Project" last fall to consider and ultimately recommend changes in the required disclosures under FAS 133. Those recommendations, to be developed by representatives of accounting firms, companies, and financial institutions, as well as by academics and analysts, should be ready for public consideration by the end of June, says Stanley Stuart Moss, manager of the project.

Comments Raja Akram, senior director in credit policy at Fitch: "While there seems to be no light at the end of the tunnel in terms of making accounting for these instruments less complex than brain surgery, maybe help is on the way through better disclosures that can help investors understand the risk better." But even if there are changes in disclosure requirements, they are unlikely to have any impact on restatements. For companies to get the accounting right, either the rules will have to change or companies will have to learn how to comply with the rules. — L.C.

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