Revisit the article Fair Value Under Fire and consider other resources used throughout the course. What information would be most valuable to management, lenders, and investors as it relates to fair value or other concepts covered in the course?

UPDATE Fair Value Under Fire New Objectives for Presenting Financial Statements Management Overlooks HR Risks Changing Priorities for Financial Firms Incentive Cutbacks Raise Audit Concerns ILLUSTRATIONS BY TIMOTHY COOK I NTERNATIONAL AND U.S. ACCOUNTING AND AUDIT standard-setters are defending fair value accounting against criticism that it may have contributed to the global financial crisis. Political and business leaders in Europe and the United States say fair value, or mark-to-markct, accounting has made matters worse by forcing banks and other businesses to assess the value of assets at current market rates, which have plummeted in the past year. In September, American Banking Association President Edward Yingling wrote to U.S. Securities and Exchange Commission (SEC) Chairman Christopher Cox asking the commission to suspend the Financial Accounting Standards Board's (FASB'S) fair value accounting guidance, Statement No. 157. "Such action is necessary to meet the SEC's obligation to provide relevant, reliable, and useful information to the users of financial statements," Yingling wrote. But it is just those users that fair value rules are intended to serve, counter consumer and investment groups, external audit firms, and the International Federation of Accountants (IFAC). Its defenders say fair value has brought to light DECEMBE R lOO S INTERNA L AUDITO R UPDATE many ofthe high-risk investments on corporate books. IFAC argues that overriding fair value accounting at the national or regional level without adequate due process vifould exacerbate reporting differences and reduce confidence in financial reporting. "Reducing transparency is not the answer," says IFAC President Fermin del Valle, "and it will not serve the interests of investors." Fair value accounting is an element in efforts by the FASB and IFAC's International Accounting Standards Board (IASB) to close differences between U.S. and international accounting standards. But obtaining reliable information relevant to fair value is one ofthe biggest challenges organizations and auditors face in the current market, according to a staff alert issued by the International Auditing and Assurance Standards Board IA.\SB). This lack of information increases estimation uncertainty and raises material misstatement risk, the alert stresses. The IAASB'S International Standard on Auditing (ISA) 545 calls on external auditors to obtain sufficient evidence that fair value measurements and disclosures conform with the organization's financial reporting framework. The FASR has weighed in on the subject with Staff Position No. 157-3, Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active. The guidance builds on staff clarifications issued by the FASB and the SEC's Office ofthe Chief Accountant, including when and how management's internal assumptions and market quotes can be used to measure fair value in a distressed market. The IAASB's staff alert. Challenges in Auditing Fair Value Accounting Estimates in the Current Market Environment, is available from IFAC's Web site, www.ifac.org. FASB Staff Position No. 157-3 and the FASB/SEC staf"clarifications can be obtained at www.fasb.org. T. MCCOLLUM IA5B and FASB Propose New Objectives for Financial Statement Presentation A JOINT DISCUSSION PAPER BY THE IASB AND THE FASB analyzes ways to present financial statements in the future. Preliminary Views on Financial Statement Presentation addresses users' concerns that existing requirements permit too many alternative types of presentation and that information in financial statements is highly aggregated and presented inconsistently, making it difficult to understand the relationship between an organization's financial statements and financial results. In a statement, FASB Chairman Robert Her z explained that the boards' goal is to create one common, high-quality global standard for financial statements to increase the usefulness of financial reports and enhance their comparability across international capital markets. Th e paper presents a principles-based format that is intended to achieve three objectives for financial statement presentation based on the traditional objectives of financial reporting, as well as input the boards received from users of financial statements and members ofth e boards' advisory groups. Thes e objectives state that information in the financial statements should be presented in a manne r that: Portrays a cohesive financial picture. Disaggregates information so that it is useful in predicting cash fiows in the nature. Helps users assess liquidity and financial flexibility. Cohesiveness would ensure that a reader of financial statements can follow the flow of information through the different statements of an organization. Disaggregation would ensure that items that respond differently to economic events are shown separately. Information about an organization's liquidity helps users assess an organization's ability to meet its financial commitments as they become due, as well as its ability to invest in business opportunities and respond to unexpected needs. Preliminary Views on Financial Statement Presentation can be downloaded from the exposure draft section ofth e FASB'S We b site, wvi'w.fasb.org. Comments on the discussion paper will be accepted through April 14, 2009. A. CAIN HR Risks Are Largely Ignored H UMAN RESOURCF^ (HR) ISSUES RANK AMONG THE TOP five business issues impacting a corporation's results, yet 41 percent of executives surveyed admit to reviewing these risks on an ad hoc basis or never, according to a Ernst Sc Young (E&Y) report, 2008 Global Human Resources Risk: From the Danger Zone to the Value Zone Accelerating Business Improvement by Navigating HR Risk. E&Y surveyed senior finance, accounting, risk, and HR executives at 150 Fortune 1000 companies about their perceptions of HR risks and the recognition these risks are given within a global organization. "HR risks are the challenges that stem from managing your people, programs, and processes, both inside and outside the walls of your business," says Bill Leisy, an Atlantabased partner with FAY's performance and reward practice. "By proactively addressing these areas, the C-suite, as well as those in HR and finance, can drive sustainable, positive business results. But if not managed properly, these issues may cause significant damage." The top five individual HR risk areas seen as having a high impact and likelihood of occurrence within an organization are: Talent management and succession planning (65 percent for impact, 42 percent for occurrence). Ethics/tone at the top (64 percent for impact, 23 percent for occurrence). Regulatory compliance (51 percent for impact, 21 percent for occurrence). Pay and performance alignment (45 percent for impact, 27 percent for occurrence). Employee training and development (41 percent for impact, 24 percent for occurrence). INTERNA L AUDITOR DECEMBER 200 8