NEW YORK, Oct. 30, 2008 (GLOBE NEWSWIRE) -- The American Society of Appraisers (ASA), the Royal Institution of Chartered Surveyors (RICS) and the American Society of Farm Managers and Rural Appraisers (ASFMRA) have written to the Securities and Exchange Commission (SEC) and other federal agencies to raise their joint concerns over changes to the FAS 157 rule.
Given the current crisis in the financial markets, subprime mortgage issues and general worldwide economic instability, the group asserts that fair valuation standards are necessary to generate future global investor confidence. Such standards create a financial reporting system based on transparency, proper disclosure and mark to market information which, in turn, provides true valuation data to investor, regulator, policy maker and tax payer.
"The current economic crisis is driving emergency actions including the easing of fair value requirements for reporting securities. However, it is important that regulators and the market do not lose sight of the basis for fair value reporting of financial instruments and all other assets," said Ronald Seaman, a Fellow of the American Society of Appraisers and the organization's International President.
While fully supportive of the SEC and FASB's effort to provide clarification on the issue of valuing financial assets, ASA, RICS and ASFMRA believe that a suspension of FAS 157, temporary or otherwise, for illiquid assets, is non-beneficial.
"Suggesting that shareholders or regulators would be better served by some notion of 'economic' or 'fundamental' value based on the current value of holding a financial investment to maturity takes no account of the default risk that is currently causing the market paralysis. To deny disclosure of current value is to potentially mislead shareholders as to the current prospects of the business. If transparency causes sudden volatility, it is not the disclosure that is the issue but the problems it reveals. FAS 157 provides the discipline of reality," said Chris Thorne, a member of the RICS International Valuation Faculty Executive Board.
Fair Value reporting provides significant information on the risk and volatility of specific asset classes which will enhance policymakers ability to respond more accurately as markets change and diminish the opportunity for speculation.
About ASA
ASA (The American Society of Appraisers) is an international organization of appraisal professionals and others dedicated to the education, development and growth of the appraisal profession. ASA is the oldest and only major organization representing all disciplines of appraisal specialists, originating in 1936 and incorporating in 1952. ASA's headquarters is in the metropolitan Washington, D.C. area. For more information please visit www.appraisers.org.
About ASFMRA
ASFMRA (The American Society of Farm Managers and Rural Appraisers) was founded in 1929 and is the premier association for property economics professionals who provide management, consultation and valuation services on agricultural and rural assets. Society members manage over 40% of the absentee farmland in the country; provide approximately 175,000 appraisals a year on 30 million acres of land and provide consulting services for over 5,500 clients who collectively represent over 7 million acres of rural real estate. For more information, visit www.asfmra.org.
About RICS & RICS Americas
RICS (Royal Institution of Chartered Surveyors), with headquarters in London, is the largest organization for credentialed professionals in property, land, construction and related environmental issues worldwide. We promote best practice, regulation and consumer protection to business and the public. Over 145,000 members in more than 146 countries operate across 17 disciplines, from development, brokerage and construction to environmental issues, valuation and fine arts appraisal. RICS is the preeminent source of real estate-related knowledge, providing independent, impartial advice to governments and global organizations. www.rics.org. The RICS credentials -- MRICS and FRICS -- are granted to practitioners who demonstrate professional competence and the highest standards of business practice and ethics through stringent evaluation procedures. RICS Americas, based in New York and covering North, Central and South America and the Caribbean, has over 3,000 members in commercial and residential development, construction management, brokerage, planning and finance. For further information visit www.ricsamericas.org or e-mail RICS Americas at ricsamericas@rics.org.