1 April 2009 — News
FEE responded to the EC request for comments on the Report of the high-level group published on 25 February 2009. FEE contributed within its area of expertise and competence to reflections on how to prevent the systemic and inter-connected vulnerabilities, including in particular the assessment of risk and the complexity of structured financial products, of the current crisis in future situations.
In its response to the Financial Crisis Advisory Group of IASB issued on 1 April, FEE takes a clear position on fair value accounting: “FEE believes strongly that financial reporting based on IFRS, and notably fair value accounting for financial instruments, has revealed the economic reality of market participants’ positions at an earlier stage than otherwise would have been the case under a more cost basis driven model. In our view, the requirement to account for certain financial instruments at fair value has not caused the financial crisis nor has it been a significant contributing factor. Nevertheless, practice has shown that fair value accounting is more difficult to apply in illiquid markets and preparers and auditors have had to use significant judgments to arrive at consistent valuations in difficult market circumstances. Preparers would benefit from additional guidance on fair value measurements when observable market prices are not available.”