Is Fair Value Accounting Really Fair?

Is Fair Value Accounting Really Fair?

Grand Canyon University: UNV-504

October 8, 2013

Is Fair Value Accounting Really Fair?

Rodriguez Bolivar, M., & Navarro Galera, A. (2012). The role of fair value accounting in promoting government accountability. Abacus, 48(3), 348-386. doi:10.111/j.1467-6281.2011.00352.x

The authors researched the effect of adopting fair value accounting as a way to increase the financial transparency of governments for greater understanding, comparability and accountability to a greater audience of users (Rodriguez Bolivar & Navarro Galera, 2012). The authors wanted to answer whether using fair value accounting would be considered useful and what methodologies best employed to yield meaningful financial information. The article detailed they hypotheses being tested, the methodologies for testing them, results and conclusions derived. In addition the article was peer-reviewed further supporting the article as a scholarly source.

Jordan, C.E., Clark, S.J., & Pate, G.R. (2013). The debate over fair value reporting. CPA Journal, 83(2), 46-51.

Using Benford’s Law, the authors sought to investigate whether valuations using fair value instead of historical cost were being manipulated upward. (Jordan, Clark & Pate, 2013) Benford’s Law is based on the probability of a number occurring in specific positions, in this specific study, the first two digits of a number were analyzed against a dataset of over 26,000 observations (Jordan, et al., 2013). This article was peer reviewed which contributes to the authority of the authors and their research.

Lilien, S., Sarath, B., & Schrader, R. (2013). Normal turbulence or perfect storm? disparity in fair value estimates. Journal of Accounting, Auditing & Finance, 28(2), 192-211. doi:10.1177/0148558X13479693

The authors performed a case study on two different companies that valued a single asset which resided on both companies’ books and how each of their audit firms, using the same...