Wiley GAAP 2008

Perspective and Issues

The community of financial statement preparers, users, auditors, standard‐setters, and regulators has engaged in a long‐standing debate regarding the relevance, transparency, and decision‐usefulness of financial statements prepared under the current US GAAP “mixed attribute” model for measuring assets and liabilities.

Financial statement users advance the argument that they are not being properly informed about the economic impact on the reporting entity of gains and losses associated with changes in the fair values of assets and liabilities that it owns or owes. They assert that, had they been provided this information, they might well have made different decisions regarding investing in, lending to, or entering into business transactions with the reporting entities.

These arguments have not been lost on FASB. In fact, FASB has been on record for more than a decade regarding its long‐term goal of having all financial assets and liabilities measured at fair value. That said, it has taken a very cautious, incremental approach towards attaining this goal. Its projects with respect to fair value have been conducted in multiple phases over long periods of time; they have involved a full complement of discussion memoranda, invitations to comment, preliminary views documents, public hearings, deliberations, and redeliberations. Certain modest disclosure standards were promulgated and later rescinded and replaced by other standards, but comprehensive requirements ...