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The importance of actuarial accounting for the assessment of the elements of the financial statementsThe assessment based on the historic cost is irrelevant when there is inflation, because itgenerates a distorted appearance of the reality: the assets are underestimated; moreover, theperformance of the company is not evaluated correctly, because the income is underestimated,and the company pays inflation tax and distributes fictitious dividends.For the companies in “the new economy” that invest a significant part of their resourcesin intangible assets, the traditional accounting model based on historic costs no longer reflectsthe reality.If there is no market price for the element that must be evaluated at its fair value, asubstitute should be found for the market value; unlike the market value, a piece of informationthat is found, its substitute is a value assessed function of our own professional judgement. Inthis circumstance, the world of accountants and financial analysts is divided between those whoare pro, and those who are against the assessment at the fair value.At the European level, the assessment at the fair value represents a rather controversialtopic. For some, the fair value is a means of rendering objective accounting information. Forothers, the fair value just a method of assessing value that can lead to creating accountingbehaviour.The most fervent opponents to the assessment at the fair value are the insurance andbanking specialists. Their worst fears are related to the adjustments generated by diminishingvalues, of the assets as compared to the market value, given the fact that their solvency andcontinuity are crucial for their depositors and insurance holders. World Bank auditors, influentialbankers, members of the Basel Committee on Banking Supervision consider that the fair valueevaluation is not adequate to the banking accounting of insurance companies. The followingquestion arises: “what will be the significance attributed by the bank auditors to their capitalbasis evaluated at the fair value as compared to the own regulated funds?” 21 The capital base ofbanks has a broader meaning than the regular capital base, since it also includes the reservesdrawn for expenses, such as reserves for credit risks. In this case, the market may mistake theincrease in the fair value of the capital base for an increase in risks, thus anticipating a crisis. Onthe other hand, bank auditors may misinterpret a decrease in the fair value of the capital base andtake corrective steps that may disturb the market.Fair value accounting cannot be adjusted to a vast number of capital transactions,especially to the European ones, for which the main priority, in what credits are concerned, isconstituted by fixed-interest rate loans. 22 The fair value evaluation in insurances is still far fromoffering the necessary guarantees in what the reliability and applicability on various markets areconcerned, if we take into consideration that there is the risk that it may induce extreme volatilityin the obtained results, which is a situation that might cause panic among insurance holders. 23Some specialists claim that the evaluation of the balance using the fair value is adequateonly for the items that are to be sold, while the others, that are to be retained should be evaluatedat their historic cost. 24It is difficult to give a definite answer to the question whether the balance at the historic will bereplaced by the balance at the market price.21 V Oung , Cosidérations prudentielles sur la comptabilisation en »juste valeur » pour les établissements de crédit,« Bulletin de la Banque de France », no. 95/November 200122 O. Pastré, M Vigier, Le capitalisme déboussolé. Après Enron et Vivendi : soixante réformes pour un nouveaugouvernement d` entreprise, Editions La Découverte, 200323 F. LUSTMAN, Normalisation comptable pour les assurances et les banques : vers des normes ou des dogmes ?,Revue française de comptabilité, no. 440/ January 200224 IAS 39 « Financial Instruments: Recognition and Measurement » recommends the fair value accounting for all thenegotiable assets and liabilities; the other elements are not negotiable (for example: the loan portfolio and bankdeposits) are entered at their historic costs.67