Last week the Financial Accounting Standards Board posted its new article, “Understanding the Issues: Some Facts About Fair Value.”  The article’s main purpose is not “to debate the pros and cons of fair value accounting," say co-authors Robert Herz, FASB Chair, and its Director Linda A. MacDonald: 

Rather, it is to provide some basic facts about fair value accounting that are important in understanding the current debate.  Specifically, (1) where fair value is (and where it is not) used in financial reporting currently, (2) what fair value is (and what it is not), and (3) the approach for developing fair value estimates, including in illiquid markets.

Expanding on this topic, the current opinion page of AICPA's Journal of Accountancy provides three different points of view on fair value.  “As the credit markets froze and stocks gyrated, investors and pundits naturally looked for someone, or some thing, to blame,” say the JofA editors.   “Fair value accounting quickly emerged as an oft-cited problem.  But is fair value really a cause of the crisis, or is it just a scapegoat?  And might it have prevented an even worse calamity?”  The article, "The Role of Fair Value Accounting in the Subprime Meltdown,” presents views from attorney Michael Young (Willkie Farr and Gallagher, LLP), Professor Paul B.W. Miller (University of Colorado, former FASB staff member), and Eugene Flegm (General Motors Corp.).  Young's comments appear to straddle a middle ground between Miller, who advocates for greater transparency with fair value, and Flegm, who takes the auditor’s perspective that historic cost accounting is more reliable.