A look back, and ahead.

• Author: Abel, James J.
• Position: President's page - Emergency Economic Stabilization Act of 2008

As 2008 draws to a close, it is hard for us to absorb all of the tumultuous things that have occurred as we navigated--albeit somewhat perilously--through the year. At this point in time, our focus in the year ahead is likely to be dominated by the results of a historical presidential election as well as how the recovery from the credit crisis will unfold.

At the beginning of this year, FEI outlined its list of the top challenges that financial executives would likely face in 2008. It is interesting to note how many of those listed have gained prominence during the year outside of the finance profession--as the credit crisis has forced a broader and almost continuous discussion of some very complex and obscure issues.

For instance, fair-value accounting and the impact of subprime mortgages became a focal point of conversation and the subject of the evening news almost daily for months. We have witnessed the decline of many of our largest commercial banks and the complete upheaval of the investment-banking industry. Some have even pointed to the significant impact of Financial Accounting Standards Board Statement No. 157, Fair Value Measurement, on the balance sheets of financial institutions, as leading to an assortment of bankruptcies, unprecedented government intervention and virtually overnight mergers or business combinations that may well continue to occur for some time.

As a result of the signing of the Emergency Economic Stabilization Act of 2008, the U.S. Securities and Exchange Commission has announced its intent to review FAS 157 in light of recent developments in the markets to determine what modifications--if any--need to take place to ensure that the application of the standard has not inadvertently created unforeseen consequences that require further review and understanding. Obviously, there are strong opinions on both sides of this issue, and additional hearings--with knowledgeable witnesses sharing recent market experiences with the standard--will continue into next year.

Another key challenge anticipated for 2008 was the discussion of convergence of U.S. generally accepted accounting principles with International Financial Reporting Standards. Although this process was understandably moved out of the media spotlight in the final quarter by the attention given to the credit crisis, this process continues to move forward in a comparatively orderly fashion. In fact, it served as a tremendous opportunity for people to gain a...