A new academic study argues that proposed changes in fair value measurement by the Financial Accounting Standards Board would make it harder to assess the financial soundness of banks, and it’s co-authored by a member of the FASB board.

In 2010, FASB proposed that in most instances institutions value their financial assets and liabilities to reflect their present market worth and not just their adjusted historic cost (the primary basis for valuation under generally accepted accounting principles). Thus, banks that were effectively insolvent—with severely devalued mortgages or securities on their books, whether from a slumping economy or plain mismanagement—would no longer be able to hide their problems by delaying write-down of their holdings to "fair" or current market value.

Register or login for access to this item and much more

All Accounting Today content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access