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Complete 8 pages APA formatted article: A Discussion on Fair Value Measurement. Among the accounting standards issued (and will be issued) by the Financial Accounting Standards Board (FASB) for the United States generally accepted accounting principles (US GAAP) and the International Accounting Standards Board (IASB) for the International Financial Reporting Standards (IFRS), nothing has been more scrutinized and criticized than fair value measurement. In fact, the focus on this measurement has been increasing for the past years or so. The IASB, itself, has been working double-time to improve the fair value measurement standards. In 2006, the IASB issued a two-part discussion paper in its invitation to comment on fair value measurement. In introducing the said discussion paper, Sir David Tweedie, the IASB Chairman, emphasized that usage of fair value in financial reporting “is of great interest to preparers, auditors, users and regulators” and that there is a need “to establish a clear international definition of fair value and a consistent framework for measuring it” (Discussion Paper, 2006). The number of comments received by the IASB for this discussion paper reached 136 and came from all sectors that are affected by fair value measurement.

Fair value measurement, however, has also been subjected to various criticisms due to its perceived shortcomings. According to PricewaterhouseCoopers or PWC (2009), one of the Big 4 auditing firms in the world, the current financial turmoil being experienced by the global company had shown the shortcomings of fair value measurement. PWC also pointed out that the critics of fair valuation have called for the temporary suspension of fair value measurement as this measurement option “creates earnings volatility and destroys bank capital” during times of illiquidity.

What exactly is fair value? According to a white paper issued by PWC in 2008, the fair value “refers to a value derived from a market with willing buyers and sellers (or an estimate thereof)”.