A former regulator and veteran CFO contends that too many critics are "missing the boat" when they argue against fair-value accounting.
A former member of the Federal Reserve Board of Governors and a one-time bank CFO, Susan Schmidt Bies looks at fair value from two sides of the debate — and she thinks "people are missing the boat." Speaking at an industry conference this week, Bies asserted that "the focus is disclosure," adding that investors, regulators and other financial-statement users aren't fixated on a single fair-value estimate. Rather, they want to understand "the key drivers behind fair-value estimates," she said.
Bies admitted that before the credit crisis took hold, companies were forced to meet their projected earnings estimates dead on and could be punished with a share-price drop for missing by a penny. She said, however, that it makes sense to reveal what goes into the key metrics that a company touts to the public because it is a much broader swath of information, and a slight deviation becomes easier to explain when put into the proper context.
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