Fair value returns.
OK, let's face it: It never really went away.
This particular bone of economic contention last surfaced in late August and early September, when the Financial Accounting Standards Board proposed an update to accounting standards that was meant to improve disclosures about fair value measurements.
Now, the Public Company Accounting Oversight Board is getting in on the act.
At an Oct. 14-15 meeting, the PCAOB's Standing Advisory Group (SAG) is expected to consider adopting a series of rules related to how fair-value measurements are reviewed by auditors and other specialists.
This white paper outlines the SAG's potential rules in detail.
The new rules could include “guidance for reviewing the work of specialists who are hired by either a company or its accounting firm to make technical valuations,” writes CFO.com's Sarah Johnson. “Other changes could include a directive for the auditors to specifically consider whether a company's explanations for its estimates are forthcoming and understandable. And the PCAOB may list factors that auditors should consider for deciding the level of veracity attached to a fair-value measurement, such as the degree of judgment involved and how susceptible the calculation is to management's manipulation or override.”
It has certainly become more challenging lately to evaluate fair-value estimates, but does that justify yet another layer of rules and regulations? Let us know what you think, then check out these related MACPA programs: