AUDITORS, INVESTORS ASSAIL MOVES TO SUSPEND MARK-TO-MARKET RULES

Posted October 1, 2008

WASHINGTON, D.C. – The Center for Audit Quality, Council of Institutional Investors and the CFA Institute – representing U.S public company auditors, institutional investors and chartered financial analysts, respectively – have jointly announced their opposition to any suspension of “mark-to-market” or “fair value” accounting.

“Suspending fair value accounting during these challenging economic times would deprive investors of critical financial information when it is needed most,” the three groups say in a joint statement.  “Fair value accounting with robust disclosures provides more accurate, timely, and comparable information to investors than amounts that would be reported under other alternative accounting approaches. Investors have a right to know the current value of an investment, even if the investment is falling short of past or future expectations.” 

The Securities and Exchange Commission and the Financial Accounting Standards Board have taken steps to clarify the fair value accounting standard. The statement adds, “The proposed suspension is unnecessary and counterproductive. It would not help solve our economic difficulties. Fair value accounting is only a means of communicating information that is important to investors and other market stakeholders, it is not the underlying cause of the current economic crisis. 

“In the interest of investor confidence and the health of our capital markets and overall economy, we urge the SEC to resist calls from those with a questionable commitment to transparency and to reject any proposal that would suspend fair value accounting.”