FAIR VALUE JUDGMENT: CLOUDY?

Washington, D.C. - Leaders of six business associations have written a joint letter to the Securities and Exchange Commission complaining that recent guidance about the use of judgment in fair value accounting "has the potential to cloud transparency."

In the letter, leaders of the U.S. Chamber of Commerce Center for Capital Markets Competitiveness, the Financial Services Roundtable, the Property Casualty Insurers Association of America, the American Council of Life Insurers, the Mortgage Bankers Association and the American Insurance Association said that they want the SEC to issue further guidance on the use of judgment in fair value accounting.

"We do not believe that management, preparers, auditors and investors understand what is expected of them, or whether and how the needed judgments can be exercised," the association leaders said. "Let us state that we believe that judgment is needed to provide the fairest and most accurate disclosures possible in inactive markets. We are not asking that unrealistic data be used, rather that fair value, under these stressful conditions, be fair."

AUDIT PROJECT NEARS END

New York - The International Auditing and Assurance Standards Board said that it is close to completing an 18-month project aimed at making audit standards more understandable.

The IAASB Clarity Project has been reviewing the International Standards on Auditing and the International Standards on Quality Control, and expects to complete the review in December. It will submit the approved standards to the Public Interest Oversight Board in February.

If the PIOB clears them, the IAASB plans to publish the set of clarified ISAs in IFAC's 2009 Handbook of International Standards on Auditing and Assurance in April 2009. The result will be 36 International Standards on Auditing, which will go into effect for audits of financial statements for periods beginning on or after Dec. 15, 2009. For more information, visit www.ifac.org/iaasb/.

Separately, the Auditing Standards Board recently released the first clarified auditing standard on auditor communications. It has also released SAS No. 115 on communicating internal control-related matters, and SSAE No. 15 on internal controls.

COUNTRYWIDE HIRES PWC

Bank of America's audit committee has hired PricewaterhouseCoopers to replace KPMG as the auditor for its recently acquired Countrywide Financial unit.

Countrywide, a casualty of the mortgage-lending crisis, said in a Securities and Exchange Commission filing that KPMG's audit reports for fiscal 2007 and 2006 did not contain any adverse opinion or disclaimer of opinion, and there were no disagreements with KPMG on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure.

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