This site uses cookies to provide you with a more responsive and personalised service. By using this site you agree to our use of cookies. Please read our cookie notice for more information on the cookies we use and how to delete or block them.
The full functionality of our site is not supported on your browser version, or you may have 'compatibility mode' selected. Please turn off compatibility mode, upgrade your browser to at least Internet Explorer 9, or try using another browser such as Google Chrome or Mozilla Firefox.

Deloitte comments on FASB's proposed ASU on disclosure framework for fair value measurement

Published on: Feb 25, 2016

Deloitte & Touche LLP comments on the FASB's proposed ASU Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement, which was issued in December 2015.

An excerpt from the comment letter is shown below:

We support the FASB's ongoing efforts to improve the effectiveness of disclosures in the notes to financial statements. In addition, we support the finalization of the proposed ASU, since it focuses on matters that are meaningful to financial statement users. However, as discussed below and in the appendix, we believe that the Board should make certain improvements to the proposed guidance before finalizing it.

Change in Unrealized Gains and Losses

Under ASC 820-10-50-2(d), entities are currently required to disclose, for Level 3 fair value measurements, the amount of the total change in unrealized gains and losses for the period "included in earnings (or changes in net assets) . . . relating to those asset and liabilities held at the end of the reporting period." Although separately providing similar information for each level of the fair value hierarchy may benefit financial statement users, we believe that the benefits of expanding this disclosure requirement to Level 1 and Level 2 fair value measurements would not outweigh the costs of tracking such information. We recommend that the Board instead require entities to disclose this information in its entirety for all levels (a new requirement) and for Level 3 separately (as is currently required). Under such an approach, users would have information about Level 3 fair value measurements and fair value measurements for all levels on a combined basis.

Range, Weighted Average, and Time Period Used to Develop Significant Unobservable Inputs

We support the Board's efforts to enhance disclosures about fair value measurements categorized in Level 3 of the fair value hierarchy by adding a requirement to disclosure the range and weighted average of significant unobservable inputs. However, we do not see the purpose of disclosing the time period used to develop a significant unobservable input and thus do not support adding this proposed disclosure requirement. The proposed ASU's Basis for Conclusions does not explain how users would benefit from the time-period disclosure. We can only assume that the Board believes that such a disclosure would help users understand whether seemingly similar significant inputs used by different entities are comparable. However, time periods could be misleading because it does not provide information on how this historical information may have been adjusted or weighted, and from our perspective, the weighted average and range disclosures can already be used to assess comparability, which makes the proposed time-period disclosures unnecessary.

Full text of the comment letter is available below.


Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.