US watchdog begins fair value education drive

US financial watchdog, the SEC, is to begin a campaign of executive education
by focusing on fair value accounting, one of the most controversial topic in
board rooms struggling with the effects of the credit crunch.

SEC commisioner Paul Atkins will headline a conference for CEOs and CFOs at
the University of South Florida alongside Edward Trott of FASB, the US’
accounting standard setter working in tandem with the IASB.

The agenda is expected to be pro fair value at a time when many in corporate
America, as well as the UK, have thrown doubt on its ability to properly reflect
true financial positions.

Michael Mard, a valuation expert who will lead several
workshops at the event, agrees that the topic is timely and quoted Bear Stearns
as an example of the need for pinpoint financial reporting. Ahead of the
conference he said: ‘Did Bear Stearns collapse because $46bn of assets were
marked to fair value, $17bn of which was at the lowest Level 3 of reporting? Or
did it collapse because its financial reporting did not show the extent of its
dependency on sub-prime mortgages and hedge fund calls and thus was not
transparent enough?’

Atkins was once a partner at PwC in advisory while Trott was at KPMG for 30
years and led the firm’s national accounting group.

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