CFA Institute Centre for Financial Market Integrity endorsed the broad use of fair value measurement for financial instruments to improve transparency, risk management and market integrity, according to a statement by Kurt Schacht, managing director.
“The CFA Institute Centre believes any effort to roll back or revisit fair value is a misguided effort on behalf of preparers that would ultimately result in less transparency and market integrity,” Mr. Schacht said in the statement.
Edward L. Yingling, president and CEO of the American Bankers Association, among critics of the accounting method, said in a report in March about the turbulent financial markets that “it is time to debate whether accounting policies are making the problem worse than it should be.”
“There are legitimate concerns about moving away from accounting purity, but it should be recognized that the proper definitions of ‘market’ and ‘fair value’ are debatable, and that there may be externalities that should be identified and discussed,” Mr. Yingling said in his report.
Mr. Schacht said in the CFA Institute Centre statement, “Maintaining the current mixed attribute model for reporting financial assets and liabilities has enabled more complacent risk management and has contributed to the lack of market discipline identified by regulators.”
The Financial Accounting Standards Board, in statements 157 and 159, both of which became effective essentially in 2008, and the International Accounting Standards Board support the use of fair value, he noted.
