SEC continues fair value investigation

Christopher Cox, SEC chairman

A second testing roundtable on the future of fair value accounting will take place today in Washington as the US financial watchdog, the Securities and Exchange Commission, investigates what it should do about the controversial accounting principle.

Among those attending will the IASB’s vice chairman Tom Jones but also on the panel will be Dane Mott the JPMorgan analyst who was among the first to defend fair value when it apparently came under attack in the US rescue package pushed through Congress at the end of September.

Mott, along with colleague Sarah Deans in London, was among the first to declare that blaming fair value, as many US politicians and businessmen had done, was simply ‘shooting the messenger’.

Before that Mott had already written in a research paper that ‘blaming fair value accounting for the credit crisis is a lot like going to a doctor for a diagnosis and then blaming him for telling you that you are sick’.

In September after the rescue package Mott and Deans wrote: ‘The reality is that fair value accounting and enhanced disclosures have helped markets quickly identify where problems exist and react to those problems.’

The review of fair value was ordered in the legislation that created the rescue package. It also reiterated the SEC’s power to suspend fair value if it wanted to.

Attendees at the first SEC roundtable at the end of October heard that giving up on fair value now would be ‘counter-productive’.

SEC chairman, Christopher Cox, has already endorsed International Accounting Standards which places fair value at the heart of many of its standards.

The International Accounting Standards Board has been under attack, both in Europe and the US, for its determination to stand by fair value accounting.

US watchdog hears fair value is 'much needed’

http://www.accountancyage.com/accountancyage/news/2229412/watchdog-hears-fair-value