U.S. authorities seek to clarify mark-to-market rules By Rex Nutting, MarketWatch Last update: 2:03 p.m. EDT Oct. 12, 2008WASHINGTON (MarketWatch) -- The U.S. Financial Accounting Standards Board issued a clarification late Friday of its mark-to-market accounting rules that could allow financial firms to value some illiquid assets higher than those assets could sell for in the current distressed markets. The FASB ruling amplifies a statement it released with the Securities and Exchange Commission on Sept. 30, with examples of how companies should use their best judgment to value assets that have no active market. "Determining fair value in a dislocated market depends on the facts and circumstances and may require the use of significant judgment about whether individual transactions are forced liquidations or distressed sales," Friday's FASB statement said. "In determining fair value for a financial asset, the use of a reporting entity's own assumptions about future cash flows and appropriately risk-adjusted discount rates is acceptable when relevant observable inputs are not available," it said. Read full FASB position statement. Many critics of mark-to-market accounting rules say banks have been weakened by the requirement to significantly write down the value of some assets. However, the latest ruling by FASB is not a complete rejection of mark-to-market that many companies, trade groups and politicians have been seeking. Rex Nutting is Washington bureau chief of MarketWatch.