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Fair Value and the IASB/FASB Conceptual Framework Project: An Alternative View

In: Accounting and Regulation

Author

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  • Geoffrey Whittington

    (University of Cambridge)

Abstract

This chapter analyses issues arising from the project of the IASB and FASB to develop a joint conceptual framework for financial reporting standards. It discusses, in particular, the possible use of fair value as the preferred measurement basis. Two competing world views are identified: a Fair Value View, implicit in the IASB’s public pronouncements, and an Alternative View implicit in publicly expressed criticisms of the IASB’s pronouncements. The Fair Value View assumes that markets are perfect and complete and that financial reports should meet the needs of investors and creditors by reporting fair values derived from current market prices. The Alternative View assumes that markets are imperfect and incomplete and that, in such a market setting, financial reports should also meet the monitoring requirements of current shareholders by reporting transactions and events using measurements that reflect the opportunities available to the reporting entity. The different implications of the two views are illustrated by reference to specific issues in recent accounting standards.

Suggested Citation

  • Geoffrey Whittington, 2014. "Fair Value and the IASB/FASB Conceptual Framework Project: An Alternative View," Springer Books, in: Roberto Pietra & Stuart McLeay & Joshua Ronen (ed.), Accounting and Regulation, edition 127, chapter 0, pages 229-268, Springer.
    • Handle: RePEc:spr:sprchp:978-1-4614-8097-6_10
    DOI: 10.1007/978-1-4614-8097-6_10
    as

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