SEC roundtable clash over fair value

Panelists of a Securities and Exchange
(SEC) roundtable on fair-value financial reporting yesterday were
in disagreement over the accounting provision which is viewed as a reward for
‘deadbeats’ by some of the panelists.

Quite a few companies ‘are already making hay’ by using the provision in
question, paragraph 15 of standard number 157, the Financial Accounting
Standards Board (FASB)’s controversial new stricture on fair-value accounting,
according to

James Tisch, Loews Corporation president and chief executive officer, the
most fervent opponent of the panel to the fair value provision, launched a
tirade against the idea of providing fair values for liabilities and argued the
notion of a company marking its own debt to market was absurd. ‘It is going to
destroy the notion of the income statement and make it unusable for investors
who just want to see how a company did for a quarter,’ he said.

Kathy Petroni, a professor of accounting at Michigan State University,
insisted the provision was ‘representationally faithful’. Wider use of fair
value would show that the loss on assets would outweigh the gain on the

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Fiona Westwood of Smith and Williamson.