Accounting measurement at fair value in the conditions of financial crisis

Abstract

The subject of the paper is the role of fair value, as one of the accounting measurement attributes (measurement basis) of assets and liabilities in the statement of financial position, in the conditions of crisis, based on the experience with global financial crisis which appeared in 2008 in the US financial sector, and later spilled over into the real sector of that country, as well as, to a greater or lesser extent, to the rest of the world. The crisis has stimulated discussions in the scientific and professional community about the usefulness of using fair value and the impact of this measurement attribute on the appearance and widening of the crisis. The aim of the paper is to consider the impact of fair value application on the occurrence of the mentioned financial crisis. Qualitative research methodology based on the review of relevant literature in the field of research subject has been applied. A review of literature available to us has shown that there is no unique attitude about the role of fair value in the financial crisis which appeared in 2008. In that sense, opinions range from the one that fair value played little or no role in the financial crisis, over the opinion that it may have contributed to the acceleration of the crisis, to the opinion that it was one of its main causes and that it should be suspended. It is certain that fair value cannot be declared as the only financial crisis causer, and that there is no only one causer. Inadequate banking practices, risky behaviour of financial markets participants, inconsistent and insufficiently coordinated macroeconomic policies, inadequate structural reforms and omission of credit rating agencies dominantly caused the financial crisis and contributed to its spread.