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Fair Uptake on the Fair Value Option, Survey Says

CFOs and controllers are lukewarm on FAS 159, according to Grant Thornton.

By Beth Karlin | Updated on October 28, 2008

About one-third or fewer companies plan to use the fair value option, FAS 159, in auditing complex financial data, according to a survey of CFOs and controllers by Grant Thornton LLP. That percentage drops to 28% when it comes to reporting the most complex and controversial products: derivatives. A bigger share (35%) of the 688 respondents intends to adopt the standard for evaluating liabilities; other financial instruments (32%); and equity-method investments (31%).

Companies want to avoid the potential for wild earnings swings so it’s not surprising that the majority aren’t using fair value, says Gary Illiano, partner-in-charge of international and domestic accounting at Grant Thornton. On the hand, says Illiano, “there are narrow circumstances when you get into complex valuations that require massive paperwork where FAS 159 makes sense.”

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