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Valuation organizations support the FASB's market value concepts in financial reporting.

During their June meeting in Toronto, Ontario, the Toronto Valuation Accord organizations reaffirmed their commitment to support ongoing changes in financial reporting standards in North America and the international harmonization of accounting standards.

Based on financial reporting standards activities over the past year, the group emphasized the importance of regulatory, corporate, and public understanding of their earlier statement that "the move toward market value in financial reporting is in the best interest of the public, investors, government, and business decision makers."

According to Brad Wagar, chair of the Toronto Valuation Accord, "Greater public knowledge and support for the work of the U.S. Financial Accounting Standards Board is particularly important.

"The FASB will hopefully follow the full international harmonization of accounting standards in other countries by no more than two years, and is currently emphasizing the crucial role of current value reporting of assets and liabilities in corporate financial statements.

"While the Toronto Valuation Accord continues to seek an already internationally accepted concept of market value, which has been used in other parts of the world for many years, we applaud the FASB's progress in incorporating market value concepts into its financial reporting framework."

According to Wagar, North American financial statements, with notable but limited exceptions, have traditionally applied a depreciated historical cost convention in financial reporting. New assets are commonly booked at their cost, but as various forms of depreciation are applied over the years, assets can grow in market value while decreasing significantly in value as reflected in financial statements.

"This difference creates potential for misrepresentation and misunderstanding in financial reporting," Wagar added. "When the value of an asset is reported at its current value in the marketplace, as contrasted with an historical cost-based number, greater public reliance can be placed upon financial statements.

"With greater public protections and improved understanding of the operations and financial conditions of reporting companies through reforms in financial reporting, investors and the public at large have greater assurance that the headline-grabbing abuses of corporate governance and financial reporting can be controlled, markets improved, and economies better protected."

At an international level, the Toronto Valuation Accord group continues to support the International Valuation Standards Committee (IVSC) in its work to ensure valuation standards are consistent with and complementary to the financial reporting standards being developed and promulgated by the International Accounting Standards Board.

The Toronto Valuation Accord coalition intends to encourage the use of market value concepts and to aid in expediting the simplification and convergence of financial reporting standards in North America and internationally.

To this end, the members of the Toronto Valuation Accord and their representatives to the IVSC seek greater public involvement and assistance to ensure that the FASB's recently released Proposal on Fair Value Measurements (www.fasb.org) has wide public response before it's finalized.

The Toronto Valuation Accord group also continues to urge FASB to work more closely with The Appraisal Foundation, and in Canada for the Canadian Accounting Standards Board to work more closely with the Appraisal Institute of Canada, as well as continue to build their interaction with the International Accounting Standards Board and IVSC, to harmonize terminology and concepts applied in the multi-disciplinary requirements of professionals who will be crucial to implementing new standards.
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Title Annotation:Finance: real estate; Financial Accounting Standards Board; Toronto Valuation Accord
Publication:Real Estate Weekly
Geographic Code:1USA
Date:Jul 21, 2004
Words:539
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