Fair Value Measurement in Financial Reporting

Abstract

The use of fair value measurements for financial reporting purposes steadily increased during the last decades, the IASB being seen as one of its main promoters. Fair value also stirred significant debates in the context of EU‟s negotiation regarding IFRS adoption, finally generating the IAS 39 carve-out seen by many as the cost paid by the IASB. As if the standard setting process for fair value measurement was not challenging enough, the recent financial crisis raised even more questions born from difficulties proven in particular cases. Furthermore, we can not neglect the forces at stake when discussing the politics in accounting, fair value again offering an extremely rich research venue. The banking industry‟s particular involvement in relation to fair value standards and regulations stands as a first indication in this direction. The main objective of our paper is to offer a synthesis on the current state of affairs in relation to fair value measurement in financial reporting. Our paper follows the standard setting process for fair value measurements starting with the international arena and further focusing on the particularities of an emerging economy. The analysis is completed by including the Romanian valuers‟ perspective on fair value measurement. The employed research methodology includes content analysis based on IASB‟s due process documents, accounting standards and regulations, as well as implementing a questionnaire survey involving Romanian professional valuers. Our paper contributes to the literature on the use of fair value in financial reporting, mainly arguing for the necessity of its consideration in relation to different information needs coming from different users. We finally conclude that if we are to continue the plan to expand the use of fair value measurement, significant clarifications remain necessary in approaching accounting standards, regulations and practices.