The American Bankers Association is requesting that the Financial Accounting Standards Board postpone the Sept. 30, 2004 effective date for the EITF 03-1, due to accounting firm Deloitte & Touche's interpretation of its application. In a letter sent last week to both Robert Herz at FASB and Lawrence Smith at EITF, the ABA's Donna Fisher explains Deloitte's belief that EITF's requirement mean "any sale out of the available for sale' portfolio of a below-market security implies that management intends to sell similar securities in the AFS portfolio," and thus "all similar securities must be written down (permanently) through earnings."
"The accounting firm's interpretation of EITF 03-1 conflicts with SFAS 115, and, effectively, would result in new accounting for the AFS portfolio at lower of cost or market." Fisher writes. "We [The ABA] do not believe that this was the EITF's intent with Issue 03-1, because we believe such changes would require an amendment to SFAS 115."