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July 16, 2008FAS 157 and the Fair Value Initiative
I just returned from a trip to San Francisco to attend an accounting conference discussing many of the recent happenings at FASB. No topic was more widely discussed than the pending move to fair-value accounting. There has been a pretty sizeable push toward fair-value over the past 10 years, with FAS 133 (Hedge Accounting) playing a big part. But FAS 157 represents the first attempt to consolidate all things fair-value into one statement.
Overall, I was left with the impression that financial professionals are not going to enjoy this push to fair-value. On the surface, it seems much easier to carry assets & liabilities at their historical cost. But, in my opinion, this shift to fair-value represents an even larger movement towards principals-based accounting (which FASB has long avoided) and a more seismic shift to alignment with International Accounting Standards. Seems like the fun has only just begun. . .
