This Guide identifies the interrelationship between paragraphs and sections of each IFRS and the IASB issued accompanying material. For instance, when reading a particular paragraph or section of IFRSs, the text answers the question: which paragraphs of this IFRS, other IFRSs and accompanying material help me understand this paragraph better? It also provides some explanatory annotations and includes the text of relevant IFRIC agenda decisions.

The seven newly revised International Standards on Auditing (ISAs) are:

• ISA 200 (Revised and Redrafted) Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with International Standards on Auditing. This fundamental ISA:
  • contains an overview of an audit to aid in understanding its purpose and scope;
  • defines the respective authority of the requirements and guidance in ISAs;
  • contains the most fundamental requirements for auditors; and
  • emphasises the importance of sound and consistent professional judgment by the auditor, and the necessity for sufficient audit evidence to support the auditor's opinion.
• ISA 320 (Revised and Redrafted) Materiality in Planning and Performing an Audit;
• ISA 450 (Revised and Redrafted) Evaluation of Misstatements Identified during the Audit;
• ISA 530 (Redrafted) Audit Sampling;
• ISA 610 (Redrafted) Using the Work of Internal Auditors;
• ISA 705 (Revised and Redrafted) Modifications to the Opinion in the Independent Auditor's Report; and
• ISA 706 (Revised and Redrafted) Emphasis of Matter Paragraphs and Other Matter Paragraphs in the Independent Auditor's Report.

FAS 157 principles that will be illustrated in the guidance:

• In some cases an entity might determine that observable inputs to a market approach valuation technique require significant adjustment and thus are ultimately considered unobservable or Level 3 inputs. The entity might then conclude that an income approach valuation technique that uses management's internal assumptions about market participants' expectations of cash flows is equally or more representative of fair value. However, regardless of the valuation technique used, entities must include appropriate adjustments that market participants would make for risks, such as nonperformance and liquidity.
• A fair value measurement represents the price at which a transaction would occur between market participants at the measurement date. As discussed in paragraph 30 of Statement 157, in situations in which there is little, if any, market activity for an asset or liability at the measurement date, the fair value measurement objective remains the same, that is, an exit price from the perspective of a market participant.
• Broker quotes or pricing services may be a relevant input when measuring fair value, but not necessarily determinative if an active market does not exist for the security. In weighing a broker quote as an input to fair value, an entity should place less reliance on quotes that do not reflect the result of market transactions.

We are very concerned about the current efforts of some to legislate the suspension of one of the FASB's standards, Statement 157 on fair value measurements. We believe that any legislative effort to overturn a FASB standard will greatly undermine investor confidence. We believe that once Congress starts setting accounting standards through its political process, the integrity of US accounting standard setting and the credibility of US financial reporting will be greatly compromised.

If Congress sends the message that special interests, through legislation, are able to overturn expert accounting judgement arrived at through an open and thorough due process, necessary and timely improvements in financial reporting will likely become impossible and the best interests of participants in the capital markets will not be served.

The principles of mark-to-market accounting are rooted in the fundamental virtue of transparency and are central to informed market decisions and efficient allocation of capital. In our view, investor confidence would be undermined by efforts designed to mask the actual value of financial assets at a given point in time.

It is important to underscore that mark-to-market accounting has contributed positively to revelations about the severity of the economic crisis facing our country's credit markets and certain institutions, but it did not create the economic crisis.

Recently, some have suggested that the Securities and Exchange Commission or the Financial Accounting Standards Board should suspend the application of mark-to-market or fair value accounting or somehow impose a moratorium on mark-to-market requirements for certain financial institutions when preparing financial statements to be used by investors.

Although determining fair values for financial instruments in an illiquid market can be challenging, the best estimate of the prices that would be received for such instruments in orderly transactions occurring at the measurement date remains the most relevant information for investors and policymakers. To lessen the uncertainties about the value of these securities, it is critical that investors continue to have the insight provided by the application of mark-to-market accounting principles.