外文文献翻译
原文：
Fair Value Changes Ahead
The use of fair value in financial reporting is not new; it is required or permitted under many standards, some of which have been in place for decades. Yet, given its role in the asset write-downs and market volatility precipitated by the financial crisis，there has been considerable discussion and debate about the use of fair value in financial reporting. As the financial crisis has broadened, the debate has evolved into a global one involving not only FASB and its international counterpart, the International Accounting Standards Board (IASB), but also securities participants in the global capital markets. Responses to the financial crisis have focused on fair value accounting and have led to changes in the standards that will affect financial reporting going forward.
The Fair Value Debate
At the center of the fair value debate is SFAS 157, Fair Value Measurements, which went into effect for financial assets and liabilities in 2008. SFAS 157 clarifies that when fair value is used in financial reportin
g, the measurement should represent a current market price. SFAS 157 establishes a framework for determining fair value, but it does not specify when to use fair value. SFAS 157 and its current market price objective only apply when other standards require or permit the use of fair value.
The reporting model in the United States (and abroad) is a mixed-attribute model that uses a combination of measurements, including historical cost, fair value, and other bases, such as lower of cost or fair value. The use of fair value has expanded in recent years. For example, more fair values are now required when accounting for a business combination under SFAS 141 (R), Business Combinations. In addition，companies have the option to voluntarily use fair value for certain financial items for which fair value is not otherwise required in specified circumstances under SFAS 159，The Fair Value Option for Financial Assets and Financial Liabilities. Nevertheless, fair value is still used most frequently for financial assets. But fair value is not always
used on an ongoing basis (mark-to-market); it often is used only when a financial asset is impaired. In today's distressed markets, many of the financial assets that trade in those markets (e.g., mortgage-related securities) are impaired.
The requirement to record impairment losses based on fair values that represent current market prices
has raised concerns about when to use fair value in financial reporting. The concerns tocus mainly on long-standing issues of relevance and reliability，as well as the volatility caused by reporting changes in fair value in net income, especially in the
absence of observable market data to support the fair values.
Some, including banking institutions subject to regulatory capital requirements, claim that fair value accounting has led to pro-cyclical behavior by forcing impairment write-downs to amounts that do not reflect the true economic values of ihe assets. They say that the write-downs have caused a downward spiral that has exacerbated the financial crisis and that fair value accounting should be suspended or modified. For example, in a public SEC roundtable on mark-to-market accounting on October 29，2008, William M. Isaac, chairman of the Secura Group of LECG and former FDIC chairman, stated: When there are temporary impairments of asset values due to economic and marketplace turmoil, regulators must give institutions an opportunity to survive the temporary impairment. Permanent impairment should be recognized, but assets should not be marked to unrealistic fire-sale prices. Regulators must evaluate the assets on the basis of their true economic value over a reasonable time horizon…[I]t is the use of MTM accounting, when markets are not functioning properly, that has produced terribly misleading accounting and disclosures that value assets well below their true econo
I believe it is extremely important that bank regulation be counter-cyclical, It is not sound public policy to cause banks to hesitate in the creation of reserves during good times when they can best afford the hit to earnings.
Others, however, including many investors, say that the information conveyed through fair value accounting is useful for decision making and enhances the
transparency of financial information, which is critical in times of stress. They say that fair value accounting has exposed the deteriorating financial condition of many financial institutions and that suspending fair value accounting would weaken investor confidence and add to instability in the capital markets. For example, in a joint statement opposing the suspension of mark-to-market accounting issued on October 1, 2008, the Center for Audit Quality, the Council of Institutional Investors, and the CFA Institute stated: Suspending fair value accounting during these challenging economic times would deprive investors of critical financial information when it is needed most. Fair value accounting with robust disclosures provides more accurate, timely，and comparable information to investors than amounts that would have been reported under other alternative approaches. Investors have a right to know the current value of an investment, even if the investment is falling short of the past or future expectations.
The Emergency Economic Stabilization Act of 2008 (EESA) required the SEC to conduct a study on the use of mark-to-market (fair value) accounting by financial institutions (section 133). In December 2008, the SEC issued Report and Recommendations Pursuant to Section 133 of the Emergency Economic Stabilization Act of 2008: Study on Mark-to-Market Accounting. Based on its study, the SEC concluded that fair value accounting provides decision-useful information to investors and did not play a meaningful role in recent bank failures. The SEC recommended that fair value accounting be improved, not suspended. Tn its report, the SEC emphasized that having standards in place that meet the needs of investors is critical, noting that the objective of financial reporting is to provide relevant, transparent, and unbiased financial information to investors and the capital markets in order to facilitate informed investment decisions. Fair Value Changes for 2009 Reporting
At this point, the key principles outlined in SFAS 157 are in effect for 2009 reporting. Recently issued fair value guidance claritles-but does not change-those principles. These recent clarifications emphasize the need for judgments that could change how some are applying those principles in the current environment, and requires more fair value disclosures.
Exit price. SFAS 157 emphasizes that fair value should represent the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction for the asset or liability at the measur
ement date (i.e.，the exit price).
The clarifying guidance affirms the fair value objective in SFAS 157. This means that fair value is a current market price (the price that would be received or paid today under current market conditions), not a future market price (what might be received or paid at some future date under different market conditions). Because fair value is a market-based measurement, the current market price is determined based on the assumptions that market participants would use when determining fair value.
Input hierarchy. The fair value hierarchy in SFAS 157 prioritizes the use of observable market prices, while allowing for the use of other inputs that would be considered by market participants when making decisions.
The clarifying guidance affirms the fair value hierarchy approach in SFAS 157 but emphasizes that market prices should not be the sole basis for a fair value measurement unless they can be observed in an active market for identical items and result from orderly transactions in that market (Level I inputs). In all other cases, the valuations will involve more work and analysis requiring informed judgments, but the fair value objective in SFAS 157 remains the same.
Active market. SFAS 157 refers to an active market as one in which transactions occur with sufficient fr
equency and volume to provide ongoing and current pricing information. The clarifying guidance emphasizes that determining whether the market for an item is (or continues to be) active requires judgment, considering the volume and level of activity for the item in comparison to normal levels.
Orderly transaction. SFAS 157 refers to an orderly transaction as one that involves a willing buyer and a willing seller and allows for sufficient exposure to the market; that is, the seller has had sufficient time to market the asset and undertake marketing activities that are usual and customary for transactions involving similar items.
The clarifying guidance emphasizes that determining whether a transaction is orderly or disorderly (i.e., a distressed sale or forced transaction where the seller is compelled to transact) requires judgment and the consideration of factors specific to
the transaction, not the market. For example, a disorderly transaction might be indicated if the seller is in or near bankruptcy or receivership, if the seller was forced
to sell to meet regulatory requirements, or if the seller was forced to sell within a period that did not allow for usual and customary marketing activities under current market conditions. The transaction focus applies even when markets are dislocated. It is not appropriate to automatically conclude that all
market activity represents disorderly transactions.
Conversely, it is not appropriate to automatically conclude that all market activity represents orderly transactions representative of fair value.
values翻译Adjustments. SFAS 157 indicates that market prices that are not Level 1 inputs must be evaluated for adjustment. The clarifying guidance emphasizes that market prices that are not Level I inputs are not determinative, especially when there has been a significant decrease in the volume and level of activity for an item. Those market prices include market prices that can be observed in active markets for similar items, that can be observed in markets that are not active for identical or similar items, and that result from disorderly transactions (Level 2 inputs). When those are used to determine fair value, they must be evaluated for adjustment and considered together with the results of valuation techniques using other available inputs.
When there are different indications of fair value, determining the point within the range that is most representative of fair value-the price at which market participants would transact under current market conditions-requires judgment, especially a consideration of the extent to which the inputs used in the valuation techniques are relevant in the circumstances.
Most Progress Needed
The Obama administration has proposed financial regulatory reforms that call on standards setters to make substantial progress on improvements to financial reporting in key areas highlighted by the U.S. Department of the Treasury, “Finan cial Regulatory Reform: A New Foundation，” calls for improvements in the areas of fair value accounting, accounting for financial instruments, and loan loss provisioning (see also “Report of the Financial Stability Forum on Addressing Pro-cyclicality in the
Financial System，’，April 2009). It also calls for progress on the development of a
single set of high-quality global standards.
The Financial Crisis Advisory Group (FCAG), a group formed by FASB and the IASB to advise on the standards-setting implications of the financial crisis and potential changes to the global regulatory environment, highlighted the need for similar improvements in its July 28, 2009, report to FASB and the IASB.
Fair Value Challenges
Notwithstanding the many clarifications provided by standards setters, determining fair value in the cur
rent environment will continue to be challenging. The markets for many financial assets that previously were active are no longer and lack the infrastructure needed to facilitate market pricing. This means that the valuations (under U.S.
GAAP and IFRS) will involve more work and analysis requiring informed judgments.
Given calls from the public and investors to increase transparency, there have also been many fair value (and other) “disclosure solutions,” and more are yet to come.
At the same time, U.S. issuers face the prospect of a move to IFRS. In the meantime, changes to reduce or eliminate differences between SFAS 157 and the proposed IFRS guidance on fair value measurement are likely, as FASB and the IASB move forward on convergence initiatives. It is too soon to tell whether changes will be made to SFAS 157, the proposed IFRS, or both. But given the role of fair value in U.S. GAAP and IFRS today, and the need for improvements going forward, a converged solution that produces the same fair value standard for U.S. GAAP and IFRS should be preferable to two similar-but different- fair value standards.
Source: MacDonald, Linda A. Fair Value Changes Ahead. CPA Journal. Vo 180 Issue I.
Jan 2010： 24-27

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