Fair Value Accounting:

The rise of the fair value accounting just before the recent financial crisis in
2007, which has been extensively criticised for exacerbating its negative
effects, also suggests for its proponents, a response to the creation of a new,
more relevant, accounting "reality". The fair value debate also re-initiated
another old fundamental accounting issue, the trade-off between the two main
objectives of the conceptual framework, both for FASB and IASB, with the idea
of the implied subordination of stewardship (reliability and verifiability) to the
decision-making/usefulness and informativeness objective (relevance) of
financial statements, which has dichotomised the academic community.
However, it also suggests a particular challenge for auditors beyond the
technicalities of applying auditing standards, reaching the limits of auditability
of financial statements, which has not been studied extensively by academic
scholars so far. The auditor's primary role is to express an opinion on whether
the financial statements give a true and fair view, i.e. the notion of auditability is
strictly related to the opinion on the reliability of financial statements (Mautz &
Sharaf, 1961) when the level of uncertainty of fair value measurement and
accounting estimates is crucial and challenges the limits of independent
testability (Power, 1996) in the auditing process.