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21 Oct 2008
The International Federation of Accountants (IFAC) has voiced strong opposition against what it sees as attempts to radically change or suspend the use of fair value accounting without proper due process.
The federation warns against making changes at a national or regional level which would ‘exacerbate reporting differences’ and further confuse financial markets, resulting in a lessening of confidence in financial reporting.
Fermín del Valle, IFAC president, said this would be ‘exactly the opposite of what is required in current circumstances. Reducing transparency is not the answer…and it will not serve the interests of investors'.
IFAC believes the additional guidance from the International Accounting Standards Board (IASB) and the United States Financial Accounting Standards Board, as well as the International Auditing and Assurance Standards Board in its Staff Audit Practice Alert, Challenges in Auditing Fair Value Accounting Estimates in the Current Market Environment, ‘has been very valuable and will contribute to the public interest through more consistent application of the standards’.
Further reading:
Investors: EC threatens transparency and comparability of accounts
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Visitor comments Add your comment
Re: Opposition to the Suspension
I agree fully with the view of IFAC. Any ad hoc doing away with fair value will only cause more distrust of the stock market and the valuation of the assets in the real market. This is a worldwide contagion that is not fully understood by political process and its players. Some countries in SE Asia are already following suit with doing away with fair value. This adds to the worry that things are worse than they seem to be and that a global depression is imminent and will occur in 2009.
Posted by: Dr Jon Tay, 26 Oct 2008 | 00:00