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Early this year, many companies took advantage of their options - their fair value options, that is - and adopted Statement 159 as of the beginning of the year. That recent standard lets companies apply fair value accounting to many balance sheet items that have been reported at historical cost or some variation thereof.

Some companies chose to game the standard, skeevily: they’d flush losses in their held-to-maturity or available-for-sale portfolios through retained earnings by the implementation process. Then they’d replace those portfolio securities with the same kind and go back to using historical cost accounting for them.

(Subscribers to The Analyst’s Accounting Observer: see Volume 16, No. 7, dated June 13, for more details and names.)

Some companies had second thoughts about the legitimacy of such an approach after SEC Deputy Chief Accountant James Kroeker warned that the Commission might challenge such treatments - and a number of companies changed their minds. (Again: complete list of the recanters is in The Analyst’s Accounting Observer, Volume 16, No. 7, dated June 13.)

Last week, another company changed its mind: Cadence Financial Corporation (NASDAQ:CADE) issued a non-reliance 8-K last week indicating it was pulling its first quarter 2007 10-Q and earnings release on the grounds that it was rescinding its fair value treatment of “a securities transaction involving fixed rate collateralized mortgage obligations [CMOs] and adjustable rate mortgage-backed securities.” The revised 10-Q should be out today.