The US accounting standard-setter has relaxed controversial fair value accounting rules, widely blamed for their role in bringing down banks' balance sheets. During a vote yesterday, the US Financial Accounting Standards Board agreed to allow banks to use 'significant' judgment regarding the values of certain assets such as mortgage-backed securities on their balance sheets. The FASB said the objective of fair value is to reflect the price of an asset, whose market is inactive or seized with illiquidity, that would have been obtained in an orderly market. This excludes liquidations and distressed sales. The FASB also introduced requirements for companies to make more disclosures to simplify the new value of the impaired assets. These are expected to be more frequent and included in quarterly financial statements as opposed to only annual ones. The board also agreed to allow early adoption of the new rules and plans to issue the revisions by 10 April - which will accommodate banks issuing quarterly statements a week later. Earlier this month, the International Accounting Standards Board put its own wrapper on the FASB's proposals. The IASB's consultation ends on 20 April. A spokesman said the board was looking at developing an entirely new standard for financial instruments rather than making 'ongoing tweaks' to the current one, but declined to comment further. The amendments come as the FASB faced pressure from Congress to change fair value rules or deal with changes forced by political intervention. The US last year criticised the IASB for bowing to political pressure from European politicians when it gave European banks the option of not applying fair value to some of their assets. The Securities and Exchange Commission also used this to question the independence of the IASB as part of its argument against adoption of International Financial Reporting Standards. Critics opposed to easing the rules include investors - the most common users of financial statements, who feel that changes would decrease confidence due to a reduction of transparency on the balance sheets. Ratings agency Fitch said that because the proposals hinge on the estimations that are provided by management, 'the proposed qualitative disclosures by themselves may not be sufficient for financial market professionals' understanding of the impairment and fair value conclusions reached by an issuer'.