Statement No. 140, "Account ing for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities," retains most of the standards that were established in the fouryear-old Statement 125.

The new statement resolves implementation issues when considering when transferred financial assets should be accounted for as sold, how the gain or loss should be recorded, and when these assets should be considered collateral for borrowings - indeed, whether the transfer should be accounted for at all.

Market analysts consider the upgrade an essential step in keeping up with the fast moving financial services industry.

Jonathan Schiff, president of Schiff Consulting, which is often an outspoken critic of FASB, offered praise to the board's handling of this exceptionally intricate issue.

"This is one of those iceberg issues," Schiff said. "To its credit, FASB is attempting to discipline the financial services industry with respect to financial assets that are transferred regularly, creating consistency in how gain and loss should be determined. The force of what [the board] has done here is sig nificant. This is a good example of FASB being proactive and trying to keep up with an industry that is bent on innovation."

Statement 140 is effective for transfers occurring after March 1, 2001, and for disclosures to securitization transactions and collateral for fiscal years ending after Dec. 15, 2000.