2013년 11월 22일 금요일

Eugenia Finnie 's blog ::.... Maine Community College Systems, About MCCS, Key Facts...news” from the Bangor Daily and none of the articles...of Higher Education, Standards for Accreditation http://www...







Eugenia Finnie 's blog ::.... Maine Community College Systems, About MCCS, Key Facts...news” from the Bangor Daily and none of the articles...of Higher Education, Standards for Accreditation http://www...








The               economic               turmoil               of               recent               years               exhibited               publicly               the               difficulties               faced               by               the               accounting               profession               in               determining               accurately               and               consistently               the               value               of               assets.

As               investment               options               grow               in               number               and               complexity,               guidance               from               the               Financial               Accounting               Standards               Board               (FASB)               lags.

Accountants               and               other               business               professionals               agree               with               the               foundations               of               fair               value               accounting,               but               remain               eager               to               see               the               broad               statements               of               previous               years               fleshed               into               precise               and               practical               standards               for               implementation.

The               call               for               the               accurate               valuation               of               assets               is               by               no               means               new.

While               historical               cost               was               once               the               only               available               standard,               the               FASB               introduced               the               tenets               of               fair               value               accounting               with               Statement               of               Financial               Accounting               Standards               (FAS)               115               in               May               1993.

This               change               in               position               responded               to               concerns               stemming               from               the               savings               and               loan               crisis               of               the               late               1980's.

Historical               cost               accounting               permitted               institutions               to               disguise               substantial               portfolio               losses               causing               substantial               harm               to               large               numbers               of               stakeholders               (Neely.)               Moving               forward               nearly               two               decades,               the               public               again               bears               the               brunt               of               corporate               greed               manipulating               accounting               standards               for               gain.
               Few               people               would               disagree               with               the               statement               that               financial               reporting               should               indicate               fair               and               up-to-date               values               for               assets               and               liabilities.

Denying               losses               and               overstating               gains               produces               a               distorted               picture               of               an               enterprise.

As               an               alternative               to               historical               cost               accounting,               businesses               looked               to               the               markets               to               provide               the               truest               valuation               of               their               investments.

Traditional               economic               theory               teaches               that               market               operations               are               rational.

Supply               and               demand               will               always               find               an               equilibrium               point               to               determine               market               value,               normally               considered               the               most               accurate               predictor               of               asset               value.

Newer               ideas               about               behavioral               finance               indicate               irrational               and               emotional               forces               acting               on               modern               markets.

These               forces               are               further               compounded               with               technology               and               the               speed               of               information,               demonstrated               recently               on               May               6,               2010,               when               the               Dow               Jones               dropped               1000               points               in               less               than               a               half-hour               only               to               recover               almost               the               entirety               before               the               day               was               out.
               Fair               value               accounting               encountered               trying               times               in               2007               -               2009.

Market               activity               slowed               considerably               as               unusual               events               undermined               confidence.

As               companies               liquidated               assets,               sometimes               in               forced               circumstances,               concern               grew               that               market               prices               did               not               reflect               the               inherent               value               of               the               investment               (Wallison.)               FAS               157               developed               several               classes               of               assets,               selecting               the               most               appropriate               valuation               method               of               each.

The               least               easily               valued               assets,               those               which               experienced               few               sales               and               irregular               trading,               contraindicated               fair               value               accounting               and               were               labeled               level               3.

Despite               this               clarification,               questions               lingered               about               the               practice               of               level               3               requirements               for               alternate               valuation.

As               markets               stagnated,               the               quantity               of               level               3               assets               held               by               major               financial               institutions               including               JPMorgan               Chase               and               Citigroup               soared               (Moyer.)
               Banks               were               not               the               only               business               affected               by               the               roller               coaster               movements               of               the               marketplace.

Modern               business               demands               the               investment               of               all               funds               at               all               times,               even               if               investing               is               not               the               primary               line               of               business.

Businesses               outside               the               financial               world               saw               their               bottom               lines               impacted               by               low               market               valuations               of               2008               and               2009,               followed               by               substantial               correction               in               the               following               period.

In               some               instances,               excessive               fluctuation               in               security               values               demolished               a               primary               line               of               business.
               The               banking               industry               balked               at               the               most               recent               guidance               from               the               FASB               as               it               introduces               sweeping               change               to               the               accounting               of               financial               instruments.

"FASB               Exposure               Draft               Alarms               Bank               CFOs"               points               out               the               conflicting               viewpoints.

The               FASB               states               "The               objective...is               to               provide               financial               statement               users               with               a               more               timely,               transparent,               and               representative               depiction               of               an               entity's               exposure               to               risk               from               financial               instruments."               Michael               Hagedorn,               CFO               of               UMB               Financial,               protests               "we               would               have               to               fair               value               our               loans               using               different               discount               rates               and               various               assumptions,               and               I               don't               see               how               that               improves               transparency"               (Ryan.)               Hagedorn's               words               indicate               a               potential               pitfall,               the               ability               to               manipulate               asset               value               through               selection               of               discount               rate               and               other               factors.
               Valuation               may               remain               as               much               art               as               a               science,               and               the               principles               behind               fair               value               accounting               speak               strongly               for               its               continued               use.

Any               system               of               rules               is               limited               by               its               practitioners.

When               new               financial               instruments               come               into               existence,               accountants               must               continue               refining               fair               value               concepts               into               an               acceptable               practice               of               standardizing               valuation               for               the               assorted               users               of               financial               accounting               and               reporting.
               Moyer,               Liz.

How               Fair               is               Fair               Value               Accounting?

Forbes.com.

25               June               2008.

Web.

5               June               2010
               Neely,               Michelle               Clark.

The               Regional               Economist:               Making               Sense               of               Mark               to               Market.

Federal               Reserve               Bank               of               St.

Louis.

January               1994.

Web.

6               June               2010.
               Ryan,               Vincent.

FASB               Exposure               Draft               Alarms               Bank               CFOs.

CFO.com               2               Jun               2010.

Web.

5               June               2010.
               Wallison,               Peter               J.

AEI               -               Fair               Value               Accounting.

"               Fair               Value               Accounting               -               A               Critique."               American               Enterprise               Institute               for               Public               Policy               Research.

28               July               2008.

Web.

5               June               2010.






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