For example, the Federal Reserve has raised concerns about the potential unreliability of fair value estimates for financial instruments for which no active markets exist. The lack of reasonably specific standards for the estimation of fair values for non-traded, illiquid instruments could lead to problems for auditors and bank supervisors in verifying the accuracy of fair value estimates.
We have also questioned whether the quality of financial reporting is strengthened when a firm reports increased profits as its own creditworthiness deteriorates because of the mark-to-market approach for liabilities. Therefore, the Federal Reserve has questioned the usefulness of comprehensive fair value accounting for all financial assets and liabilities in the primary financial statements.