The Role of Fair Value in the Application of International Accounting Standard

Many doubts still persist in the entire economic community regarding the adoption and use of international accounting standards as provided for in European Parliament and Council regulation No 1606/2002 of 19 July 2002.The aim of this study is to investigate the probable effects arising from the implementation of fair value, the valuation method that the International Accounting Standard Board sets in order to valuate certain balance sheet items. Once the concept of fair value has been defined, I first verify the possible change in the quality level of external financial reporting and I examine the impact that its adoption may have on internal administrative procedures. I aim to verify whether the expected increase in costs, due to the more complex internal administrative procedures associated to the changeover from the historical cost to the fair value method, may ensure a higher degree of transparency and comparability of financial statements within the European Community.