As a result, they said, the convergence project underway at the International
Accounting Standards Board ‘needs a radical rethink’, because it seeks to set in
stone a global fair value system.
These are inflammatory words for the IASB which has suffered a number of
attacks on convergence recently from UK regulators and European politicians ¬
notably the ones that now play a role in giving the green light to new
standards. It’s safe to say IASB officials were unimpressed.
They will disagree with the reasoning. Fearnley and Sunder build a very
attractive critique of fair value based on a spiral argument. Valuation of
assets at market prices, feed into the accounts which are then used to make
investment decisions which bolsters the price which, to complete the circle,
feed back into the accounts. A nasty spiral they claim which perpetuates a
bubble. But what is the value of an asset if it isn’t the market value? That’s a
tricky one to untangle.
But it’s difficult to maintain a critique of fair value while claiming it
contributed significantly to the sub prime mortgage crisis, as Fearnley and
Their opponents will argue that the real fault lay with lenders who handed
over money to people who had little hope of paying it back. The crisis is
exacerbated by institutions who bought the debts without interrogating the full
risk, or knowing the history of the asset.
Clearly the debate over IFRS has some mileage ¬ but it is yet to turn wholly
against the new standards. Having said that, the IASB will now have to renew its
efforts at persuasion.
Revenue and profitability growth in on the rise for CPA firms, found a survey from the American Institute of CPA’s and its subsidiary CPA.com
The second largest improvement in ‘significant’ levels of financial distress since the EU Referendum was in professional services, found research from Begbies Traynor
Carter Backer Winter has acquired Edwards Financial Services, expanding its financial planning department
New growth opportunities in Aberdeen, North East Scotland, are being invested in by Grant Thornton