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164335 1 (1991-05-20)

handle is hein.gao/gaobacxka0001 and id is 1 raw text is: United States General Accounting Office Oashington, D.C. 20548 Accounting and Financial Management Division May 20, 1991 Director of Research and Technical Activities Financial Accounting Standards Board 401 Merritt 7 P.O. Box 5116 Norwalk, Connecticut 06856-5116 Dear Sir: SUBJECT: File Reference No. 098-E The United States General Accounting Office (GAO) has reviewed the exposure draft on Disclosures About Market Value of Financial Instruments. We are pleased to have this opportunity to provide comments on the draft. The GAO supports the adoption of this exposure draft as a Statement of Financial Accounting Standards. We believe it is essential that financial statement users be adequately informed of the current market value of all of an entity's financial instruments. Market value information is needed in order to (1) assess the overall financial condition of the entity, (2) assess management's performance with regard to those financial instruments, and (3) arrive at conclusions necessary for decision-making. We have a particular interest in market value information with regard to financial institutions. The GAO has been studying the issues surrounding the need for market value information from financial institutions. The continuing crisis in the savings and loan industry and the growing problem of insolvency within the banking industry would have been more readily apparent had market values been disclosed for all financial instruments. We have also been reviewing a related issue regarding the application by financial institutions of the requirements of FAS 5 and FAS 15 in the valuation of non-performing loans and repossessed collateral. The use of historical cost-to value debt securities and loans, especially non-performing loans, held by banks and thrifts has been one of the leading factors in masking the need for earlier intervention to save failing financial institutions.

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