Groups join to oppose suspension of fair value accounting

The Center for Audit Quality, Council of Institutional Investors and the CFA Institute have joined together to oppose any suspension of “market-to-market” or “fair value” accounting.

“Suspending fair value accounting during these challenging economic times would deprive investors of critical financial information when it is needed most,” a statement from the group effort read. “Fair value accounting with robust disclosures provides more accurate, timely, and comparable information to investors than amounts that would be reported under other alternative accounting approaches. Investors have a right to know the current value of an investment, even if the investment is falling short of past or future expectations.” 

Earlier this week, FASB agreed to issue additional guidance on the proposed FASB Staff Position 157-d, Determining Fair Value in a Market That’s Not Active, in light of current events in the financial markets and legislation under consideration in Congress.

The fair value guidance is being issued amid cries from bank lobbyists, trade groups, lawmakers, and the Bush Administration to suspend fair value accounting. A provision that is contained in the bill defeated in the House on Monday could give the SEC the authority to pull a company's requirement to follow FAS 157 as long as the suspension of the accounting rule is in the public interest and will protect investors.

The U.S. Senate did pass the bill late Wednesday, Oct. 1. The bill now goes back to the House for another vote on Friday.

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