The Council of Institutional Investors, the CFA Institute and the Center for Audit Quality oppose any suspension of “mark-to-market” or “fair-value” accounting, according to a joint statement issued today.
“Suspending fair-value accounting during these challenging economic times would deprive investors of critical financial information when it is needed most,” the statement said.
The revised financial market bailout proposal gives the SEC authority to suspend use of the Financial Accounting Standards Board’s Statement 157, which provides a framework for valuation measurement when no active market exists.
“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,” the joint statement said. “Investors have a right to know the current value of an investment, even if the investment is falling short of past or future expectations … The proposed suspension is unnecessary and counterproductive. It would not help solve our economic difficulties.”
The FASB and SEC issued a clarification of fair-value accounting in an effort to bolster implementation of mark-to-market measurements during the market turmoil, according to a joint news release today.
FASB also proposed issuing additional interpretive guidance on fair-value measurement under the rule’s goal of achieving better consistency and comparability.
The board provided for a public comment period through Oct. 9 on the proposals. It plans to meet Oct. 10 to decide on the proposals.
