The SEC’s study of mark-to-market accounting is winding down, and Compliance Week’s Tammy Whitehouse published some interesting insight into the initial comments made by SEC Chariman Christopher Cox.  The main thrust is that the fair value model is not at fault for the grave concerns of the markets, and that the standards need to be viewed as a constant amidst the carnage.

In answer to the call that went out for a rule change to ease the burden on companies that have been hit by a deterioration in value, Whitehouse offers a key observation and quote from Cox:

Cox defended the independence of the standard-setting process at the Financial Accounting Standards Board, where the accounting rules are written, imploring the future administration from excessive tinkering. Invoking lessons from the market collapse of the 1930s, the savings-and-loan crisis of the 1980s, and the corporate scandals of the 1990s and early 21st century, Cox said standard setting must remain free of self-serving influences. “It must also be protected from any regulatory reform in the new Congress and administration,” he said. “Accounting standards should not be viewed as a fiscal policy tool.”

A silver lining from the global financial debacle may be that standards are better understood and more widely respected.  Just Google “mark to market accounting” (here - I did it for you!) and witness the litany of results from the Fall of 2008 –  It’s clear that the concept has hit the mainstream.

This entry was posted on Wednesday, December 10th, 2008 at 10:01 am and is filed under Accounting, Fair Value. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.