The US regulator is ready to release a report this week which will advise its standard-setter to freeze changes to fair value, while recommending companies post additional information on their websites for the purposes of shareholders.

A committee at the Securities and Exchange Commission will tell the Financial Accounting Standards Board to hold off introducing new changes to fair value until other work on measurements have been completed.

The committee also made observations that the current use of fair value in a 'mixed-attribute' model - in which some assets and liabilities are measured using fair value, while others are measured using historical cost - is complex and confusing.

The observation has upset some who have interpreted this as a failure to endorse fair value - currently favoured by the International Accounting Standards Board and the Financial Accounting Standards Board.

'We think the discussions [in the final report] will slow down the process in moving toward fair value,' Glenn Doggett, a policy analyst at CFA Institute, told Financial Week.

'It was one of the more difficult issues we tackled,' said Dennis Beresford, an accounting professor at the University of Georgia and member of the committee.

The committee did not repeat calls for existing fair value rules but instead recommended a sample chart of how companies could break out accrual and cash items in a spreadsheet to allow investors to segment fair-value measurements,' Beresford said.

Committee chair Robert Pozen said that the recommendations are not intended to require any votes by the US Congress and that they can easily be taken up by the SEC.

'Whoever is in the next commission, I believe they will continue reading this document. The recommendations are all very doable. We're trying to avoid having stillborn types of suggestions,' Pozen said.

The committee also suggested that companies use their websites as tools of information, with the inclusion of hyperlinks, executive summaries of annual reports and additional shareholder information.

Today the SEC will also consider whether to publish an interpretive release to provide guidance regarding the use of company websites under the Securities and Exchange Act of 1934 and the anti-fraud provisions of federal securities laws.

The committee's recommendation - that companies will no longer have to restate financial reports so long as the accounting errors are not material - has also come under fire from consumer groups in the US, concerned that this will lead to companies obscuring or ignoring past errors.

The committee has one final vote on recommendations this Thursday, after which it will release its final report.

Further reading:

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