Wednesday, July 9, 2008

SEC,FASB PCAOB,IASB - The fair value game

The SEC held a Roundtable discussion today on the Next Steps in Fair value Guidance. See the FEI (US) blog at:

The SEC wll be consulting with the FASB and the PCAOB on the next steps on fair value reporting to ensure that it serves the interest of investors and all users of financial statements. This is a very hot topic. Among other issues, there has been a lot of "teeth gnashing" over mark to "market" write downs from the sub prime and other credit crises. How good are the fair values? There can be problems for example when there is no active market for a particular instrument. Some are even raising a number of problems with fair value reporting itself.

I watched the first part of the Roundtable Discussion on the SEC site. The SEC will have an archived version of the broadcast up on its site soon.

The Roundtable discussion was in the context of US GAAP but does have potential implications for IFRS as well. It does not seem likely that the IASB will be abandoning fair value reporting but there could be lessons in providing guidance on fair value measurements themselves. In November 2006 the IASB issued a Discussion Paper on fair value measurement.

The Discussion Paper used SFAS 157 as its starting point.

A discussion of the status of the IASB's fair value measurement project can be found at

An Exposure draft is planned by the IASB in 2009, after further consultation. Final fair value measurement guidance is expected to be released in 2010 (the year before IFRS adoption in Canada and Brazil and India).

The FEI blog will post more highlights from the SEC Roundtable in its next edition.

I will be following this fair value issue closely and provide more comment and discussion over time. There are a lot of individual issues that are worthy of discussion.

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