Introduction
Looking closely into this issue, and the articles which written about the current financial crisis, we can find mainly three causes contributing to this crisis.
3. Accountant influence for this financial crisis
3.1 Accountant criterion
the huge uncertainty in the future to the financial risk.
3.2 Disclosure of accounting information
4.0 Crisis on the impact of accounting
*4.1 Fair Value Accounting* amid financial crisis
4.2 New Fair Value Standards
Achieving understandable, comparable, relevant and reliable financial reports will always be the most important objective for the fully informed financial markets. The recent crisis have raised two different situation:
Increased financing costs
Difficulty in the valuation of debt securities.
The second situation also brings the problem with the fair value. It is true that fair value tends to increase procyclicality and make valuation difficult in case of illiquid markets. The main problem in fact are those financial instruments that the banks hold trading in an active market but then the market disappeared which makes the valuation more difficult not the fair value.
Additionally, within the global convergence and harmonization, fair value plays a very important role because investors appreciate the transparency provided by the fair value. Despite its disadvantages, fair value seems the most effective method that reflects the economic realities best in comparison to historical cost applications ignoring the current market values of financial instruments. Fair value, as a market based approach, results with more transparent and additional information that best fits to the following accounting objectives:
− Accurately reflect the current situation of a company which can be stated as “true and fair view”.
− Comparable and understandable financial reports
Financial reports with the most reliable, objective and relevant information.