Joint letter to US SEC supporting fair value measurements
21 Oct 2008
On 15 October 2008 the Center for Audit Quality, CFA Institute, Consumer Federation of America, and the Council of Institutional Investors issued a Joint Letter to US SEC Chairman Christopher Cox urging the SEC not to override the fair value guidance recently issued by the Financial Accounting Standards Board, FSP FAS 157-3 Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active (FSP).
|
A move by the SEC to suspend fair value accounting would be a disservice to the capital markets, would be inconsistent with the views of investors, would harm the credibility and independence of the standards setting process, and would run counter to fundamental notice and comment principles. With third quarter financial statements now in process and year-end 2008 imminent, such a change could jeopardize already-fragile investor confidence. No one disputes that these are trying economic times. However, the current crisis of liquidity, credit, and confidence was not caused by fair value accounting; rather, sound accounting principles helped expose the problem. 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. |
