Management is required to consider all relevant information when determining whether a security has underlying factors that may indicate other-than-temporary impairment (such as the factors discussed above). When there is an overall decline in the economy, the negative factors will likely outweigh the positive factors for many investments, resulting in an other-than-temporary impairment. Nevertheless, for each reporting period, management must still consider whether factors indicate that an investment may be impaired.

We believe the positive evidence required to overcome the need to take an other-than-temporary impairment must be verifiable and objective. If a client believes that the decline in the value of its securities is temporary, engagement teams should also consider reviewing investees’ press releases and websites, as well as industry periodicals, analyst reports and duration analysis similar to that which is used in option-pricing models for evaluations of equity-investment holdings. For debt securities, management should evaluate whether the security's implied yield indicates that an other-than-temporary impairment exists. It would be difficult for management to assert that recognition of an other-than-temporary impairment is not required when the amount of unrealized losses is significant or the decline in value continues beyond a period that is considered reasonable. The SEC has also emphasized that the phrase "other-than-temporary" should not be interpreted as meaning "permanent." The SEC staff has addressed impairment matters in a number of comment letters that it has sent to registrants. A registrant's accounting may be challenged when the amount of unrealized losses is significant, or the decline in value continues beyond a period that the SEC staff considers reasonable. We understand that the SEC staff may challenge a registrant’s basis for not recording a loss when the decline in value has existed for a period of six to nine months or more. Recognition of other-than-temporary impairment also may be required if the decline in a security's value is due to an increase in market interest rates or a change in foreign exchange rates since acquisition.