The Financial Accounting Standards Board has issued a proposed clarification to a fair value disclosure exemption affecting private companies and nonpublic not-for-profit organizations.
The proposed Accounting Standards Update is intended to clarify the scope and applicability of a disclosure exemption specific to private companies and not-for-profits that resulted from the issuance of Accounting Standards Update No. 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs.
The proposed amendment would clarify that the requirement to disclose “the level of the fair value hierarchy within which the fair value measurements are categorized in their entirety (Level 1, 2, or 3)” does not apply to private companies and nonpublic not-for-profit organizations for items that are not measured at fair value in the statement of financial position, but for which fair value is disclosed.
FASB has been urged to make fair value measurement a less onerous task for private companies and nonprofits. Its parent organization, the Financial Accounting Foundation, recently established a Private Company Council that will vote for and recommend differences in accounting standards for private companies (see Private Company Council Holds First Meeting).
The proposed Accounting Standards Update is available for review and comment at www.fasb.org. FASB is asking stakeholders are asked to review and provide comments on the proposal by Jan. 22, 2013.