Documenting Fair Value Determinations in an Uncertain Economy

While the changes made to fair value accounting may seem like yesterday’s news, it is still important to maintain a strong control environment and robust documentation over the valuation of financial instruments in order to ensure reliable and transparent accounting. It is critical to remember that the valuation of financial instruments is the responsibility of management and that management must be prepared to support the reasonableness of these values. This is increasingly true as the normalization of some markets may require the use of different valuation inputs than those previously used and as proposed accounting guidance may expand the scope of financial instruments presented at fair value on the balance sheet.