Fair Value Accounting Does Have more opportunity for Fraud by: Kenneth
I agree fair value accounting does have more opportunity for fraud. SFAS 157 provides for the method of determining fair value (market, income, cost), but at each level there is an opportunity to inflate the asset.
From drawing invalid assumptions about market prices at the market level (without actually selling it), to drawing invalid assumptions about the assets replacement cost, estimated useful life, and use at the cost level, it does seem that there is plenty of room to book inaccurate asset values. It will most certainly make the process of valuing assets more complex as well.
