Yesterday, the SEC announced details on the process and initial steps that the SEC has undertaken to conduct a study on "mark-to-market" accounting. The study is authorized and required by Section 133 of the Emergency Economic Stabilization Act of 2008 (“EESA”) to be completed by January 2, 2009 in consultation with Treasury and the Federal Reserve. The SEC has appointed James Kroeker, Deputy Chief Accountant for Accounting at the SEC, to serve as staff director for the study. The SEC plans to schedule public roundtables to obtain input into the study from investors, accountants, standard setters, business leaders, and other interested parties.

Among other items required under Section 133 of EESA, the study will focus on the impact mark-to-market accounting standards have on a financial institution’s balance sheet, on bank failures in 2008, and on the quality of information available to investors. Practice issues surrounding "mark-to-market" accounting has often been a heavily debated topic and there have been calls for the Financial Accounting Standards Board to provide additional guidance. Just prior to the enactment of EESA, the SEC and FASB staffs issued some guidance on mark-to-market accounting while acknowledged that “the current environment has made questions surrounding the determination of fair value particularly challenging for preparers, auditors, and users of financial information.”