SEC Chief Accountant letter to AcSEC on blockage factors project

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November 30, 2000 Mr. Mark V. Sever Chairman, Accounting Standards Executive Committee Ernst & Young LLP 111 North Canal Street Chicago, IL 60606-6301 Dear Mark, On October 4, 2000, representatives of the Planning Subcommittee of the Accounting Standards Executive Committee (AcSEC) met with the SEC staff to discuss the status of existing projects and the scope of new ones. At that meeting, we discussed a potential AcSEC project on blockage factors. That project would address the use of a blockage factor in estimating the fair value of an unrestricted investment if a quoted price in an active market is available. At that meeting, I indicated that the staff believes AcSEC should not pursue this project until such time as broader guidance on valuation models and methodologies used to measure fair value is completed. With the significant need for additional work in this area, I have separately encouraged the AICPA to take a leadership role to improve the quality and comparability of fair value measurements, and the auditing of those measurements. A copy of that letter is attached. If you have any questions or would like to discuss these issues further, please contact Jackson Day or David Kane at (202) 942-4400. Sincerely, Lynn E. Turner Chief Accountant cc: Arleen Thomas, American Institute of Certified Public Accountants Attachment

http://www.sec.gov/info/accountants/staffletters/acsec113000.htm

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Modified: 07/25/2001