The American Institute of CPAs has written to the Securities and Exchange Commission urging it to allow the Financial Accounting Standards Board to continue to set standards for mark-to-market accounting.

The SEC is conducting a study on mark-to-market and fair value accounting mandated by the financial rescue bill, which it plans to complete by Jan. 2. In a letter to SEC deputy chief accountant James Kroeker, AICPA president and CEO Barry Melancon said that FASB should remain the organization to address the study's recommendations. The American Bankers Association has asked the SEC to override FASB guidance on fair value accounting and to create an accounting oversight board that could overrule FASB (see Bankers Call for New Accounting Oversight Board).

Melancon (pictured) defended FASB's role in setting standards. "We believe that the FASB, with appropriate oversight by the SEC given its investor protection mandate, is best able to decide what is the most appropriate financial reporting for the capital markets," he wrote.

He also called for transparency in accounting standards and said that the SEC and FASB should continue to work with the International Accounting Standards Board on converging U.S. and international standards on fair value accounting (see International Accounting Group Appeals to Bush). 

While the SEC conducts the study, Melancon suggested that it also seek input from U.S. depository institution regulators "to determine if the SEC's investor protection mandate needs reconciling to the depository institution regulators' mandate to protect the safety and soundness of the U.S. financial system and the deposit insurance fund."

Once the study is complete, the AICPA wants FASB to consider how the results should be applied to privately held companies. "Differences in fair value accounting for private entities would be warranted only after deliberate consideration of user needs and the related costs and benefits to key constituents of that financial reporting," said Melancon.

Separately, accounting firm Rothstein Kass has released a white paper report intended to help hedge funds, private equity firms, funds of funds and other alternative investment firms understand the challenges of implementing fair value accounting standards. The report is available at The report features a framework for determining fair value hierarchy, as well as a "frequently asked questions" section.

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