The Institute has released a report on the US sub-prime mortgage market, which provides an insight into the various factors contributing to this credit crisis and the impacts this has had on the financial statements of financial institutions and investors in mortgage-backed securities. 
 
The report is titled The collapse of the US sub-prime mortgage market – Understanding the impacts under IFRS. It concludes that responsibility for the collapse cannot be placed on one particular stakeholder. Borrowers, mortgage originators, investment banks, credit rating agencies, preparers and investors each played a role in the collapse. Even those involved in protecting investors – including accountants, auditors, standard setters, legislators and regulators – need to reconsider their role. 
 
The report recognises that none of the parties identified above can guarantee that investors will receive reliable and relevant information to assist in their decision-making process, without the will and support of others. The report finds that the accounting standards alone are not the answer. It is important to understand that much of the information provided to investors in advance of a securities purchase is not within the realm of the standard setters, but of the relevant regulator and/or legislator. 
 
Discussions are already being held between the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) to determine how the accounting profession can assist regulators in this regard. As regulators and/or legislators and standard setters consider future changes, it is important that blame not be laid upon the traditional scapegoats, being the accounting and auditing profession. Regulators and/or legislators, in particular, need to consider all parties in any legislative changes. 
 
Download the report: The collapse of the US sub-prime mortgage market – Understanding the impacts under IFRS. 
 
This article was taken from ANT19/2008 and is current up to 23 May 2008