In our previous column, we analyzed the comments on Paul Miller's op-ed in the May 2008 Journal of Accountancy offered up by a CPA and controller we're calling "Tom." Our goal is not to embarrass but to persuade him and others to embrace the opportunities created by fair value reporting.Before we paused, we praised Tom for his fervor and integrity in supporting what he believes is right. At the same time, though, we described how he and like-minded accountants who cling to the status quo are overlooking GAAP's shortcomings while consciously or unconsciously disregarding the advantages of unfamiliar new practices.

We specifically questioned whether audits of current GAAP financial statements are worthwhile if they don't convey useful information. We also challenged Tom's assessment of the dangers of subjectivity in fair values by first pointing out that GAAP is full of subjectivity and that fair values are not necessarily subjective. Finally, we chided him for focusing on audit risk, instead of users' information risk. The former makes auditors uncomfortable and more expensive, but the latter drives capital costs up and stock prices down.

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