PCAOB says don't revise fair value
PCAOB chairman says people want to change the rules because they don't like the answer that fair value produces
The US audit watchdog chairman has expressed reluctance to make changes to
‘fair value’ accounting, urged by some in the wake of the credit crunch and huge
company writedowns.
‘The bigger problem is that I think that people didn’t like the answer. And
so they would like to have seen a change in the rules or a change in the
formula,’ Accounting Oversight Board chairman, Mark Olson said, according to
Reuters.
Investors have begun questioning the method following massive write-downs,
some of which are believed to have been exaggerated, during the subprime turmoil
in the US mortgage industry.
Critics believe that even when a commodity, such as credit in the market,
dries up, complex models must be used to produce values which can be confusing
to investors.
But those in favour of fair value believe it is more transparent for
investors.
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