CFA Institutes members in the European Union overwhelmingly oppose suspending fair-value accounting standards, according to the results of an overnight poll by the worldwide association of investment professionals.
Of 597 respondents, 79% do not support the suspension of fair-value standards under the International Financial Reporting Standards, while 21% support a suspension, said a CFA statement about the poll results.
Also, 85% of 559 respondents think that a suspension of fair-value standards would further decrease confidence in the European banking system, while 15% think it would not, the statement said.
CFA Institute polled its EU-based members in advance of a summit called by the EU and French President Nicholas Sarkozy to establish a common European position on regulation, the statement said. The summit is scheduled for Saturday.
CFA Institute believes that fair-value accounting, coupled with accompanying disclosure, aids transparency and allows investment professionals to assess the financial health of a company, Jeff Diermeier, president and CEO of CFA Institute, and Nitin Mehta, managing director, wrote in a letter to Mr. Sarkozy. It can also discourage company management from taking imprudent risks. This financial crisis is about the mispricing of risk and ill-considered risk management.
We urge EU leaders (to) keep fair-value rules in place so that investors continue to have the most relevant or faithful representation of economic reality with which to make their decisions, particularly during periods of extreme market stress, their letter states. Such transparency sits at the heart of restoring confidence, and we should not allow ourselves to be distracted by fine-tuning the accounting rules in the belief that this will fix the situation.
CFA Institute has 97,000 members, including 11,600 EU-based members.