A Study on Accounting Disclosures for Financial Assets Securitizations － An Example of Banking Industry
Date Issued
2005
Date
2005
Author(s)
Hsu, Hsing-Li
DOI
zh-TW
Abstract
The purpose of this study is to examine the detailed disclosures for financial assets securitization in the annual reports of the U.S. banking industry. First, this study introduces briefly the background of assets securitizations, including the definition and evolution of securitizations, the motivations of bank securitizations, the new Basel capital Accord, and the issues involved with disclosure of financial assets securitizations. The main statements of financial accounting standards being examined in this study are FASB No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities” and the ROC Statement of Financial Accounting Standards No.33.
Secondly, this study observes and summarizes the results of the 66 biggest banks in USA about the disclosure of assets securitizations using FASB No. 140. Finally, from the investors’ perspectives, some suggestions about existing accounting standards and banking industry are proposed:
1. Disclosures of Securitizations
a. Quantifying credit enhancement
b. Disclosing the cash flows between the transferor and special-purpose entity by major asset type and by formats is required.
c. Disclosing gains or losses on sales and financial assets securitized across years and by formats is suggested.
2. Disclosures of Retained Earnings
a. Encouraging banks to disclose expected credit loss.
b. Disclosing key assumptions and sensitivity analysis by retained interests and formats.
c. Disclosing average amounts of managed loans.
3. Disclosures of Servicing Assets
a. Disclosing key assumptions and sensitivity analysis about servicing rights.
b. Quantifying the risks.
c. Encouraging banks to use formats about the changes of valuation allowances and servicing assets.
4. Methods of Disclosures
a. Putting securitization disclosures under the same item of financial reports.
b. Encouraging banks to use easy-to-use and easy-to-understand formats.
c. Regulating the sequence of the disclosures about securitizations.
d. Encouraging enterprises to use subtitle about important items.
e. Setting up materiality standards.
Subjects
金融資產證券化
附註揭露
銀行業
Securitization
Disclosure
Banking
Type
other
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