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Disclosures About Market Value of Financial Instruments

T-AFMD-91-6 Published: May 30, 1991. Publicly Released: May 30, 1991.
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Highlights

GAO discussed the Financial Accounting Standards Board (FASB) exposure draft entitled "Disclosures about Market Value of Financial Instruments." In a series of reports, GAO identified accounting, auditing, and internal control weaknesses, which continue to be a significant cause of bank failures. These breakdowns in corporate governance led to bank failures and highlighted a seriously flawed warning system to identify troubled banks. GAO believes that revising the accounting standards used to assess the soundness of banks would alert regulators to the possible failure of certain institutions sooner. One of the revisions GAO believes would be of use is the disclosure of the market values of financial instruments. FASB's exposure draft documenting market value disclosures gives regulators additional tools to identify institutions that may possibly fail. With a few refinements, FASB's guidance will strengthen the government's regulatory efforts.

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Accounting standardsAuditing proceduresAuditing standardsBank examinationBank failuresBank managementBanking regulationFinancial instrumentsFinancial managementInternal controls