Accounting ‘could be affected by credit crunch’

The US-based Centre for Audit Quality and the American institute for
Certified Public Accountants have issued three white papers addressing concerns
raised by the liquidity crises in the credit markets.

The papers follow concern around troubled
sub-prime-mortgage loans, along with warnings that
investors may be sidelined and auditors more challenged by the impact this
could have on public companies, AP reported.

The group said that it was not unreasonable to expect that current conditions
could persist for an extended period of time until the uncertainty is reduced.

The papers – prepared with input from the Financial Accounting Standards
Board, the Securities and Exchange Commission and the Public Company Accounting
Oversight Board – cover fair value, consolidation of commercial paper conduits,
and accounting for underwriting and loan commitments. The reports further
outline existing US accounting rules in the respective areas and explain their
application in situations of ‘illiquid market conditions’.

Further reading:

one of the white papers here

FDs prepare for the crunch

Morgan Stanley suffers $940m sub-prime hit

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