NU Online News Service, Oct. 16, 12:25 p.m.EDT

A U.S. Financial Accounting Standards Board proposal, intendedto improve existing financial statements' fair value accountingmeasurements, will actually make them difficult to compare andinterpret, an insurance industry group said.

That analysis, coupled with a letter to the FASB asking it tomake changes, came from the Group of North American InsuranceEnterprises (GNAIE).

FASB's objective in making the changes is an enhancement of thedisclosures where fair values are measured using non-marketobservable inputs and better aligning disclosures about fair valuemeasurements with those required under International FinancialReporting Standards (IFRS 7), GNAIE said.

In a comment letter written Tuesday, however, GNAIE said that inaligning its Proposed Accounting Standards Update (ASU) onimproving disclosures of fair value measurements with theinternational standard, FASB should first evaluate globalimplementation practices to determine whether global conformityexists.

Moreover, GNAIE said it believes enhanced disclosures for Level3 measurements should be qualitative, focusing on the potentialvariability of reasonably possible significant inputs, the causesof that variance and how the reporting entity arrived at thereported fair value.

Providing the type of enhanced disclosures where the majority ofa fair value measurement is affected by inputs that are not marketobservable would align the required disclosures provided by IFRSreporters and limit incremental disclosures to those that are mostrelevant to financial statement users, according to GNAIE.

"If the scope of the proposed ASU is not revised, we areconcerned that the information may not be comparable amongcompanies and will provide more difficulty for financial statementusers to interpret due to the quantity of instruments subjected tothe requirements and the wide variations in grouping, estimatingand presenting Level 3 sensitivities," said the letter from KevinSpataro, chair of GNAIE'S Accounting Convergence Committee, to FASBchairman Robert Herz.

GNAIE added that FASB's approach would not achieve the objectiveof improving disclosures for Level 3 fair value measurements andthe proposed effective dates do not provide enough time to developand execute necessary implementation plans.

The GNAIE organization said its goal is "to influenceinternational accounting standards to ensure that they result inhigh-quality accounting and solvency standards for insurancecompanies and, to that end, to increase communications betweeninsurers doing business in North America and internationalregulators and standard setters."

To meet its goals GNAIE said it works at modeling proposedaccounting standards, analysis, comment and coordination withvarious end users of financial reports.