Fair-Value Accounting

August 17, 2009 11:45am by Barry Ritholtz

I cannot figure out why some people (like my pal Brian Wesbury) want to hide investment values from Shareholders.

As a company, if you don’t want to report the daily price fluctuations, you can easily move any investments into an account that is “Held to Maturity.” That way, there is no reporting of volatility unless there is an actual (realized) loss.

Of course, that leaves room for not reporting losses ntil the very last possible undeniable minute. But that is still better than mark-to-make-believe.

But not reporting the actual value of trading assets? That is fraud as far as I am concerned.

Source:
Fair-Value Accounting Is ‘Horror Flick Monster’: Chart of Day
Brendan Moynihan and Tom Contiliano
Bloomberg, Aug. 14 2009
http://www.bloomberg.com/apps/news?pid=20601109&sid=a1Qa_Q_PbGWc

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