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FASB May Overhaul Accounting Standards Used by MF Global

FASB may review some accounting tricks in light of the MF Global investigation

Following the disastrous accounting that lead to it filing for bankruptcy, the tactics used by MF Global could be revised by the Financial Accounting Standards Board, Reuters reports.

The company's accounting treatments and disclosures of its European sovereign debt exposure are already under investigation by the Securities and Exchange Commission. Now, FASB is making moves, including holding a public meeting earlier in March, to determine whether the rules for repurchase agreement disclosures need to be updated, the news source explains.

"Moving forward with this project will involve a series of public education and decision-making meetings and the exposure of a proposed standard for public comment," said Financial Accounting Standards Board Technical Director Susan Cosper in prepared testimony quoted by Reuters.

As Georgina Lavers writes for Securities Lending Times, MF Global had been using repo-to-maturity transactions to finance its dealings with European sovereign debt. As a result of that strategy, its exposure would not be included in its balance sheet. Lavers notes that FASB and the SEC started their talks about the accounting tactic earlier this year, and that other observers' comments determined that repurchase agreements would benefit from revisions and improvements.