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clock Created with Sketch. 09/05/18
11:43
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Originally posted by taipan168
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No doubt they are valuing their investments at fair value as required by the accounting standards. The issue with illiquid assets with no ready market is that there is a very wide range of valuations that can be justified for each asset. Being an investment manager, I know that I could justify pretty much any reasonable valuation to an auditor depending on whether I want to be conservative or aggressive. There is always a "discussion" between the auditor and the manager around the valuations but if you're persuasive enough you can usually always convince them.
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Agreed - the approach has shades of the Enron mark-to-market fiasco. An opaque 'fair value' that is used to book profits in the current period based on management-derived assumptions that extend years and years into the future. Cash doesn't come in for years, or more likely never.
