Ethics is imperative to effective fair value reporting: weaving ethics into fair value

The use of fair value measurement in accounting has been a source of concern for accountants and auditors, legislators, regulators and market participants. The role of fair value measurement (also known as "mark to market" accounting) in precipitating the near-collapse of financial markets...

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Bibliographic Details
Published in:Review of business 2010-03, Vol.30 (2), p.50
Main Authors: Cortese-Danile, Teresa M, Mautz, R. David, Jr, McCarthy, Irene M
Format: Article
Language:English
Subjects:
Accounting
Analysis
Audit risk
Bank failures
Economic crisis
Economic stabilization
Ethics
Fair value
FASB Staff Positions
Financial accounting standards
Financial instruments
Financial markets
Financial reporting
Financial statements
Laws, regulations and rules
Liability
Mark to market accounting
Mortgage backed securities
Professional ethics
Regulation of financial institutions
Securities markets
Values
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Summary:The use of fair value measurement in accounting has been a source of concern for accountants and auditors, legislators, regulators and market participants. The role of fair value measurement (also known as "mark to market" accounting) in precipitating the near-collapse of financial markets in 2008 has been debated by Congress, the Securities and Exchange Commission and the Public Company Accounting Oversight Board, among others. The issuance of Financial Accounting Standard 157, Fair Value Measurements, and the subsequent clarifications provided in Financial Accounting Standards Board (FASB) Staff Position 157-4 are part of the FASB's effort to promote consistency and comparability in fair value measurement. The latitude afforded entities to assign fair values to assets and liabilities means that the most important "principles" in mark-to-market accounting are the ethical principles of preparers and auditors who estimate and attest to the fair values reported in financial statements.
ISSN:0034-6454