RegulationAccounting StandardsFair value suspension branded ‘stupid’

Fair value suspension branded 'stupid'

Accounting and valution analysts voice alarm at the prospect of a suspension in fair value

Analysts have said that the possiblity of fair value being dropped in one
part of the world while it still operates in another is ‘stupid.’

The move has been ruled out in Europe for now, but might still happen in the
US. The prospect of having a suspension in fair value in one jurisdiction while
it still operates in another would cause serious comparability problems for
end-users.

‘Would you have [mark- to market suspended] just in the US, just in the UK,
or just in my office? There would be no comparability.’ said Peter Elwin head of
accounting and valuation research at Cazenove Equities. ‘How stupid is that?’

His comments were made at PricewaterhouseCoopers’ Meet the Experts event in
London, which also heard from Bob Herz, chairman of FASB.

‘Suspending fair value is completely the wrong thing to do,’added Elwin.

Sarah Deans of JP Morgan called for fair value rules to be toughened not
relaxed. The chartered accountant said: ‘ We should have more fair value for
financial instruments not less. I am very alarmed at the proposals. I would
rather have fair value than what someone thinks or hopes what something might be
worth.’

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