When fair value accounting was first brought in by the International Accounting Standards Board a few years ago, there was some grumbling about the volatility it would introduce, but in a buoyant economy it made company figures look good, so the matter passed.
But with the credit crunch now in full swing the matter has been brought to a head as figures take a turn for the worse. Companies, regulators and politicians are all attacking the accounting method, banks are making huge write downs in their books and accountants are taking some of the flak for it. Should companies simply ride out the current economic storm, or should fair value be replaced with a 'fairer' method of accounting.
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