A speech by a staffer at the Securities and Exchange Commission has set off a cascade of warnings to auditors to watch for “valuation manipulation,” as a new standard allowing more discretionary use of fair value accounting takes effect.
Joe Kroeker, deputy chief accountant for the SEC, told a recent New York conference on principles-based accounting that the SEC staff is already alert to the reporting games that some preparers are playing, or may be planning to play, thanks to the newly adopted Financial Accounting Standard No. 159, Fair Value Option.
