No more mark-to-market guidance: PCAOB

By Rachelle Younglai

WASHINGTON (Reuters) - The chairman of the U.S. audit watchdog agency said on Friday it had no plans to issue further guidance on new market-to-market accounting rules even though the business community has asked for it.

"We don't have anything planned for additional guidance," Mark Olson, chairman of the Public Company Accounting Oversight Board, said at the Reuters Global Financial Regulation Summit.

Early in April, U.S. accounting rulemakers made changes to allow companies more flexibility in their use of the mark-to-market accounting rule, which has been blamed for forcing banks to record billions of dollars in asset write-downs.

Business groups have said the PCAOB needs to be aligned with the accounting rulemaker, the Financial Accounting Standards Board, so that companies are not afraid to use the new accounting rules.

Mark-to-market requires assets to be valued at what they would fetch in a current market transaction. If there is little demand for an asset, as is the case for many assets linked to mortgages, management is allowed to use its best estimate based on models to value the securities.

But even though federal regulators and FASB have repeatedly said that companies do not have to use fire-sale prices when valuing their assets, companies have been fearful of using models and other assumptions to price their assets.

The so-called exit price in an inactive market is often an artificially low price, critics say.

Olson said company auditors are required to "come with a certain amount of professional skepticism."