Questions Remain on 'Fair Value' Accounting

If a new survey is any indication, a push by the Financial Accounting Standards Board to have all financial instruments marked to market would be at odds with the preferences of most investors. After conducting hour-long, face-to-face interviews with 62 users of financial statements, PricewaterhouseCoopers determined that a majority of respondents want to retain a more nuanced system, where the appropriateness of using fair value would be dictated by the characteristics of either the financial instrument itself or the company recording it. Lest the banking lobby declare victory, very few investors are happy with the status quo. Only 13% of the survey respondents said financial statements and disclosures are "sufficiently useful" in their current form. Investors want to know more about how financial instruments are valued, and how sensitive the values are to changes in key assumptions. They want more details about portfolio composition and risk. But they don't want to be inundated with dense, technical data that gets in the way of making sense of the disclosures. Investors said it is important to see fair-value data on loans held for sale, equities owned for the long haul, traded securities and on derivatives. But they assigned less importance to fair value when it comes to deposits and loans held to maturity.