By Dave Barrett

Dave Barrett is an accounting lecturer at the University of Maine and former auditor for Arthur Andersen. He takes perverse glee in the knowledge that no matter how sucky an auditor he was, at least he didn't suck as much as the Enron auditors.


So the question gets asked about fair market values of assets, and why we don’t record all our fixed assets on the balance sheet at their market values (we use their original cost if you’re really interested in knowing). It’s a good question, and it strikes right to the heart of the relevance versus reliability dichotomy. On the one hand, we want information to be relevant. Relevant information is decision useful information. On the other hand, we want information to be reliable. Wild guesses aren’t so good, even if the thing you’re guessing about is the financial equivalent to “life,…