At last Wednesday's meeting, the Financial Accounting Standards Board reaffirmed that it would issue an exposure draft of the proposed modifications to FIN 46, though the board did not give an exact date for the release.

For early adopters, and - depending on the timing of the final release - other pre-final draft adopters, FASB has tentatively ruled that restatements of previous FIN 46-related filing modifications are optional.

While the release date is still undecided, FASB is intent on a first quarter 2004 implementation (for filing periods ending after Dec. 15, 2003).

"My personal opinion is that the nature of the modifications fall into the categories of technical corrections, clarifications or slight relaxations that impact only a minority of situations involving the application of FIN 46," wrote Marty Rosenblatt, of the securitization group at Deloitte & Touche, in a brief circulated after FASB's meeting.

Contacts at FASB did not return phone calls as of press time. For a detailed summary of last Wednesday's meeting, see Ernst & Young's technical write-up on p. 13.

Potential casualties

Meanwhile, Federated Investors announced last week, in its 10-Q filing with the Securities and Exchange Commission, that it is still assessing the implications in implementing FIN 46, though it warned that it may be consolidating $1.1 billion in assets associated with CBOs it manages.

Federated stated that its maximum exposure to loss in these CDOs is less than $1 million.

"Although Federated's maximum exposure to loss over the remaining life of the CBOs is $0.6 million, Federated will experience period-to-period income statement volatility if consolidation of the CBOs is required," the company states. "The cumulative effect of loss adjustment that Federated would have recorded at [Sept. 30] if consolidation had been required approximated $105 million."

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