SEC Study Recommends Keeping Mark-To-Market Accounting

Background

On December 30, 2008, the Securities and Exchange Commission (the "SEC") issued its study¹ on fair value accounting.² The study recommends that existing fair value accounting and mark-to-market standards, including Financial Accounting Statement 157 ("FAS 157"), should not be suspended. The report recommends improvements to existing accounting practices, including reconsidering the accounting for impairments and the development of additional guidance for determining fair value of investments in inactive markets, including situations where market prices are not readily available.

FAS 157 provides a uniform definition across accounting principles and a common framework for the application of fair value, as well as requiring additional disclosures relating to fair value measurements. Fair value is defined as "the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at