FAS 159 Survey - Self Serving or Reality?
The recent survey just announced by our friends at PriceWaterhouseCoopers noted that only 11% of financial services CFOs will NOT use the FAS 159 fair value option, effective November 15 for most companies. More than a quarter of the CFO’s see implementing fair value (FAS 159 coupled with FAS 157) will have the greatest impact on their business or finance team. Survey respondents were the nearly 400 senior finance executives attending PwC’s Finance Executives Forum, responsible for various industries, including banking, capital markets, consumer finance, real estate and asset management firms. (Read more at CFO.com’s web site: http://www.cfo.com/article.cfm/9254335/c_9256135?f=home_todayinfinance&x=1).
Reading this article reminded me of this famous scene from E.T., the Extra Terrestrial:
Elliot: He’s a man from outer space and we’re taking him to his spaceship.
Greg: Well, can’t he just beam up?
Elliot: This is REALITY, Greg.
Is this PwC survey an accurate reflection of reality? Or, could this be a more self-serving effort on the part of the Final Four firm to push their expertise in implementing FAS 159? More importantly, does this survey accurately depict what insurers will do?
In brief discussions on this topic with large insurers, the answers tend to be a non-committal "We are reviewing it." But, can the largest, publicly held insurers shy away from FMV when their competitors for capital (other publicly held institutions) are doing so? And, if the largest insurers move toward FMV, won’t medium and then smaller sized GAAP filing insurers be under pressure to follow?
Is the PwC survey reality? Or, are they trying to ‘beam up’ a solution to a non-existent problem?
Join the discussion, by going to our forum, under the FAS 159 topic.
