Fair value measurement

Date recorded:

At their October 19, 2011 joint meeting, the boards discussed the development of educational material relating to fair value measurements. The IASB staff first described the objectives and processes underlying the staff plan to develop these educational materials. Following the staff's presentation, members of both Boards commented.

Proposed plan for developing educational material

The IASB staff first described this overarching project objective: educational material relating to fair value measurements will describe the thought process that one might go through to meet the objective of a fair value measurement consistent with both IFRS 13 Fair Value Measurement and ASC Topic 820 Fair Value Measurement in the FASB Accounting Standards Codification.

The staff then described the process identified for developing these materials. The fair value measurement project team, comprised of staff from both the IASB and FASB, will develop the educational material. An advisory panel comprised of experts preparing fair value measurements in both emerging and developed economies will assist the project team. Membership would include experts (a) who attended the Emerging Economies Group (EEG) meeting in July 2011, (b) from other emerging economies, (c) from the International Valuation Standards Council (IVSC), (d) from the United States, and (e) from other parts of the world. This panel would help develop educational material covering examples discussed at the EEG meeting in July 2011 and would bring other relevant examples to assist in meeting the objective of describing the process involved when applying the fair value measurement principles of IFRS 13.

The IFRS Foundation will publish educational materials developed by the project team, which will model the materials on the IASB's fair value Expert Advisory Panel's report issued in 2008 entitled Measuring and disclosing the fair value of financial instruments in markets that are no longer active. Similar to this report, the educational materials discussed today would not be authoritative. The target date for issuance is June 2012. The IASB staff will post a draft document on the IASB's website, enabling interested parties to review the document and provide their views.

As noted above, the IFRS Foundation will publish the educational materials. However, because IFRS 13 and Topic 820 represent substantially converged standards, any material developed for applying IFRS 13 could be used by entities applying US GAAP.

Comments from members of the boards

Some board members expressed concern that the materials might be wrongly viewed by the public as authoritative and that issues raised during the process to develop these materials may indicate a need to amend IFRS 13 or Topic 820. In response, the staff highlighted its intention to make clear that all materials are not authoritative. Leslie Seidman, Chairman of the FASB, also noted that the boards would jointly consider any potential amendments to IFRS 13 or Topic 820, including any practical expedient for determining a fair value measurement. In a related comment, the staff also noted its intention to carefully word the educational materials, avoiding language that could be construed as amending or interpreting the measurement and disclosure requirements of the standards.

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