Mark-to-market accounting is a term that has received a lot of press in recent months as toxic securities seemed to come out of the woodwork. The idea is that companies holding illiquid securities should sell a few to get a fair market price and then value their portfolio at that value rather than an "estimated value" or "last trade value". The big debate now is whether or not mark-to-market accounting is good or bad for companies, investors and the general public.

The SEC announced today that it would hold a November 21st roundtable concerning this mark-to-market process. The first panel will focus on:

• Usefulness of mark-to-market accounting to investors
• The sufficiency of information and the ability to improve the reliability regarding the valuation of assets recognized at fair value that do not currently trade in an active market
• Challenges encountered and best practice used by preparers of financial statements related to estimating fair value during the current market conditions
• Whether there are aspects of the current fair value measurement accounting standards that are not sufficiently clear, and if so, what are the areas that could be improved and how
• Whether there needs to be more education related to fair value measurements
• Challenges that auditors have faced and best practice employed in providing assurance regarding fair value accounting
• Ways to increase transparency and consistency in the application of impairment models for investments not held for trading purposes

The mark-to-market represents a major problem in the marketplace as illiquid trading may cause securities to trade well below their intrinsic valuation. For example, if a mortgage security is rating AAA grade and expected to come to value in 30 years, but no credit is available for investors to purchase mortgages then nobody will be willing to pay any price for them. As a result, marking them to market may cause an unnecessarily low valuation for a security that may really be worth much more. However, others insist that the only real value is the market value and as a result this is a very fair way of doing things.