Row over fair value accounting escalates

Institutional investors and accountants alike are attacking calls for the
suspension of fair-value accounting rules, considered as part of the revised
$700bn financial rescue package on which the US congress is expected to today.

‘Suspending fair value accounting during these challenging economic times
would deprive investors of critical financial information when it is needed
most,’ said the Council of Institutional Investors,
for Audit Quality
and CFA Institute in a joint statement.

‘The proposed suspension is unnecessary and counterproductive. It would not
help solve our economic difficulties. Fair value accounting is only a means of
communicating information that is important to investors and other market
stakeholders, it is not the underlying cause of the current economic crisis.’

Meanwhile, The Daily Telegraph reports that Dennis Nally,
(PwC) chairman, has written a warning to every member of Congress this week that
a suspension of the rules ‘will only obfuscate the current economic picture for
investors and regulators and might even plant the seeds for the next crisis’.

Further reading:

US plan to ditch fair value ‘shoots the messenge

The Daily Telegraph story

Related reading

Fiona Westwood of Smith and Williamson.