It's funny what time, a little perspective, and a comprehensive report from a high-profile advisory group will do to popular opinion.
The Financial Crisis Advisory Group, a committee of 18 members chosen by the Financial Accounting Standards Board and the International Accounting Standards Board, has released a report that tells us what we already knew — that accounting standards did not cause the global financial crisis and that the fair value witch hunt of early 2009 was little more than a political show that set a dangerous precedent.
Just as we suspected. The question is, will we learn anything from that rush to judgment, or will we all just panic and overreact again the next time a crisis comes calling? Time will tell.
In the meantime, there are other lessons to be learned, particularly for CFOs and other financial executives.
“The FCAG recommendations,” writes CFO.com's Marie Leone, “range from asking companies to take more responsibility for 'effective price verification' when valuing financial instruments, to developing robust disclosures around structured financial products, to developing a permanent funding mechanism for the IASB as a way to protect its independence from 'undue influence.'”
That last point speaks to a greater concern about independence in standard-setting. According to Leone, the report suggests that the IASB and the FASB should “define when it is appropriate to expedite the rulemaking due process, and how to inject into that rushed process the 'maximum' amount of consultation that is practical. The group also wants to see policymakers 'refrain' from writing, or rewriting, accounting rules.”
Sounds like fair, reasoned advice to me. We could've used it about a year ago, but hey, better late than never.
What are your thoughts about the report? Let us know, then check out the schedule of upcoming MACPA professional issues updates. These popular programs are free for MACPA members and are worth four hours of CPE.