Pity the accounting boards trying to come up with new fair value, or mark-to-market, accounting rules, with industry feedback like below.
It’s from Valuation Research, which undertook a survey on attitudes towards fair value accounting. The report, completed in May, examines the fair value opinions of financial professionals from accounting, investment banking, private equity, hedge funds, law and consulting backgrounds.
Survey respondents are unsure about the capability of publicly traded banks to reasonably estimate their own level 3 financial assets-assets that are not publicly traded and don’t have easily accessible values. A full 44% believed the bank values were within an accuracy of 10% and another 40% thought those values were as much as 30% off. Only three percent believed bank reported values are within 3% of an accurate value, while another 12% thought the accuracy was within 5%.
Nevertheless…
Respondents were split when asked if mark-to-market should be suspended for the purposes of bank regulatory capital with 50% believing it should be and 50% believing it should not be.
Mix messages much?
Related links:
Accounting brinkmanship – FT Alphaville
The IASB does fair value – FT Alphaville