For this week’s discussion, I found an article titled “Charles Lee: Why
Fair-Value Accounting Isn’t Fair” by the author Edmund L. Andrews.
The article goes into detail on how Professor Charles Lee, an
accounting professor at Stanford Graduate School of Business,
believes that fair value accounting does not align with the
“fundamental purpose of accounting.” Professor Charles Lee believes
that accountants should be acting as record keepers and story tellers
based on historical transactions. He believes that as accountants, we
should be using actual values instead of predicting the value of assets.
In this article, it continues to detail how Professor Lee thinks that
using fair value would cause great uncertainty in financial reports and
that shareholders should make their own predictions on the
company’s future value based on using the historical costs. a
I agree with Professor Lee’s stance in this article. He articulates that it
is not the job of an accountant to predict the future value of the
company but to provide information based on transactional history
that will help shareholders forecast the company’s future. There can
be so much inconsistency when trying to predict a value or the future
value of an asset. It can open an avenue to providing even more
inconsistent information. I believe cost accounting to be more
favorable to fair value and agree with this article on Professor Lee’s
take. Cost accounting provides a clear guideline on using historical
data and as a financial statement user, this helps prevent any
uncertainty that the information I am reporting is correct. a
Charles Lee: Why Fair-Value Accounting Isn’t Fair | Stanford
Graduate School of Business
