The Securities and Exchange Commission has begun a study of mark-to-market accounting, which will look at the standard’s effects on bank failures.
The study, authorized by the Emergency Economic Stabilization Act of 2008, which President Bush signed into law last Friday, will examine the impact of mark-to-market accounting on financial institutions’ balance sheets and on the quality of financial information available to investors, the SEC said yesterday.
The agency will also focus on the process the Financial Accounting Standards Board uses in developing accounting standards and look at alternative accounting standards to those provided in Financial Accounting Statement 157 on fair value.
James Kroeker, deputy chief accountant at the SEC, will serve as staff director for the study in consultation with the Treasury and the Federal Reserve System. The SEC plans to complete the study by Jan. 2. Between now and then, the regulator will schedule public roundtables to obtain input from investors, accountants, standard-setters and business leaders.
Financial Executives International issued a statement following the SEC's announcement. In it, FEI said it "supports the SEC’s decision to commence its study of the impact of mark-to-market accounting so quickly..." It added that the group believes "it is worthwhile to study the real-world impact of accounting standards, in particular to consider potential improvements in light of recent market events."
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