SEC, FASB, PCAOB To Consider Next Steps in Fair Value Guidance

In closing remarks following SEC’s Roundtable on Fair Value Accounting held earlier today (July 9), SEC Chairman Christopher Cox said, “We heard [that providing] guidance, continued improved guidance from SEC and FASB can perhaps smooth out some of the rough edges in FAS 157, 115, 133 and 159.” He added, “The Commission and staff will meet with FASB and PCAOB to consider next steps, making certain Fair Value accounting truly serves the interest of investors and all users of financial statements.”

[Note: the FASB standards referenced by Cox pertain to: Fair Value Measurements (FAS 157), Accounting for Certain Investments in Debt and Equity Securities (FAS 115), Accounting for Derivative Instruments and Hedging Activities (FAS 133), and The Fair Value Option for Financial Assets and Financial Liabilities (FAS 159).]

In thanking panelists for appearing, Cox said, “This has been an exceptionally useful forensic analysis how FAS 157 has fared during what some panelists called its ‘baptism of fire,’ and how it has performed overall under significant stress.”

“Our panels have given us some useful real world insight,” he added, noting, “we heard from investors today Fair Value can be extremely useful, we heard from large financial institutions that Fair Value accounting is worth the challenges because it is better than the alternatives, but some of those institutions and some public companies have told us [of] significant challenges… and when Fair Value is unreliable, it can result in unintended consequences.”

Cox then again thanked the panels and staff, including moderators from SEC, FASB and PCAOB staff. PCAOB Chairman Mark Olson also attended and addressed a few questions to the panels.

“Today’s roundtable has exceeded our highest expectations,” Cox concluded.
FEI member Gary R. Kabureck, VP and Chief Accounting Officer at Xerox, and a member of FEI’s Committee on Corporate Reporting (CCR), participated in the roundtable.

Of note is one new Commissioner, Elisse B. Walter, sworn in earlier today, participated in the SEC roundtable along with Cox and Commissioners Paul Atkins and Kathleen Casey. The other new commissioners recently confirmed by the Senate, Luis Aguilar and Troy Paredes, will be on board pending being sworn in.

We will post more highlights from the SEC roundtable tomorrow.If you received this blog post from 'a friend' and would like to receive our blog by email, enter your email address here.

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