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FASB plans to conduct research and outreach with stakeholders on fair value measurement

  • FASB (US Financial Accounting Standards Board) (lt blue) Image

11 Mar 2014

The Chairman of the US Financial Accounting Standards Board (FASB) has submitted a letter to the Financial Accounting Foundation’s (FAF’s) Standard-Setting Process Oversight Committee acknowledging the results of the FAF's post-implementation review (PIR) of FASB Statement No. 157 'Fair Value Measurements'. The review team had concluded that the standard generally achieves its purpose and provides investors with decision-useful information. However, it also noted that some investors found certain aspects of the standard challenging.

In an initial reaction to the post-implementation review report on Statement 157 Fair Value Measurements, which is substantially converged with IFRS 13 Fair Value Measurement, that was published in late February, the FASB had stated that it was pleased with the many positive aspects of the fair value standard that had been identified (among them the fact that the Standard met its objectives and did not result in any unanticipated consequences) and would provide a response explaining the next steps the FASB intended to undertake soon.

The FASB has now announced that given the overall results of the PIR it does not see any need to undertake a comprehensive review of Statement 157. Nevertheless, as the FAF review team found that some investors had difficulty understanding fair value information provided in financial statements, that there were varying views about the volume and extent of fair value disclosures (which some investors felt were excessive, while others asked for more) and that some stakeholders found it difficult to apply certain requirements of the standard for employee benefit plans, not-for-profit organizations, and private companies, the FASB has decided to reach out to its stakeholders on these aspects and will give consideration to the issues identified in the context of other initiatives of the FASB:

However, the FASB acknowledges the feedback summarized in the PIR Report that indicates some stakeholders find certain aspects of Statement 157 to be challenging. In considering this feedback, the FASB plans to conduct research and outreach with stakeholders in connection with in-process projects and initiatives.

As one of the projects that could be used to address some of the perceived problems the FASB mentioned its disclosure framework project where the FASB has just recently published an exposure draft proposing a decision process to be used by the Board and its staff for evaluating what disclosures should be required in the notes to the financial statements.

Please click for the following information on the FASB website:

The IASB has signalled an intention to commence a post-implementation review of IFRS 13 in 2015. Meanwhile it has undertaken a project to address the unit of account for financial assets that are investments in subsidiaries, joint ventures and associates measured at fair value. An exposure draft is expected in the second quarter of 2014.

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