The Securities and Exchange Commission’s Advisory Committee on Improvements to Financial Reporting called for a “judicious” approach in expanding the use of fair-value accounting as part of 25 recommendations it unveiled Aug. 1 to improve the usefulness of financial information to investors and reduce the complexity of the financial reporting system.
Chaired by Robert C. Pozen, chairman of MFS Investment Management, the committee’s recommendation on measuring value includes urging more disclosure on what part of earnings are derived from historical cost accounting and what part comes from fair value measure.
“The committee didn’t try to resolve the debate” between historical accounting and fair-value measure, Mr. Pozen said at a webcast briefing Aug. 1 with Christopher Cox, SEC chairman, unveiling a 172-page report containing the recommendations.
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