I am concerned that this is the most ill-conceived part of ongoing bail-out activities, which have started on a wrong footing and which threaten the long-term functioning of capital markets through political interventionism rather than a calm hand. Corporate accounting is aimed to reflect economic reality, and thus must not be subject to political fiat. The current thrust of activism aims to put the ostrich's head back in the sand. But guess what - it doesn't belong there! The consequence of such ill-advised changes would be that users of financial statements will loose confidence in corporate accounts, which is expressed directly in valuations. So, the effect will be contrary to intentions.
Tuesday, October 21, 2008
Confidence in accounts
Today's FT has an article referring to a letter that we've co-signed. The letter's signatories object to the ongoing political activism to relax accounting standards relating to the measurement of financial instruments.
Posted by Chris at 10/21/2008
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