Andrew Butter puts the case for changing fair value to conform to international valuation standards
The first time mark to market was put into the spotlight was when Enron collapsed; a key tool deployed for this confidence trick was ‘marking to market’ the value of future revenues from gas supply contacts.
Mark to market has been accused of under-valuing securities once the markets turned, thus exacerbating the severity of the downturn, although accountants have correctly pointed out that this yardstick quickly and efficiently exposed the reality of past imprudence and the subject was effectively closed in mid-2008.
Advertisement
Clarifications have been put in place both by the SEC (in respect of US GAAP) and IFRS to slightly water down the rules and allow some securities to be held to maturity.
See full Article.
Posts
