The Financial Accounting Standards Board has responded to a post-implementation review of its accounting standard for fair value measurement, saying it doesn’t plan to make any comprehensive changes.
Last month, FASB’s parent organization, the Financial Accounting Foundation, released the latest in a series of post-implementation reviews of older accounting standards, in this case of Statement No. 157, “Fair Value Measurement.” The FAF found the standard generally met its objectives, even though it acknowledged that some investors have difficulty understanding the fair value information provided in financial statements, and their level of satisfaction with the information varies (see Fair Value Accounting Standard Gets Mixed Review).
As is customary with the post-implementation reviews, FASB provided a written response to the report.
“We recognize that the PIR team received conflicting or mixed feedback from stakeholders in some areas including the sufficiency and completeness of disclosures and the relevance of Statement 157 to certain types of entities,” wrote FASB chairman Russell Golden in a letter posted on FASB’s Web site. “The feedback noted in the PIR Report in these areas is generally consistent with feedback the FASB received during the initial deliberation and was considered thoroughly by the Board in reaching the conclusions in the Statement. The feedback in this area is also generally consistent with input the Board has received since Statement 157 was issued. Given the PIR Report concludes that Statement 157 was successful in achieving its objectives and that Statement 157 generally provides investors with decision-useful information, the FASB sees no need to undertake a comprehensive review of Statement 157.”
Golden acknowledged the feedback in the report indicating that some stakeholders found certain aspects of Statement 157 to be challenging and said FASB would do further research and outreach.
“In considering this feedback, the FASB plans to conduct research and outreach with stakeholders in connection with in-process projects and initiatives, such as the Disclosure Framework Project, the simplification initiative research project, the research project on accounting issues in employee benefit plan financial statements, and the ongoing involvement of the Private Company Council (PCC) and Not-for-Profit Advisory Committee (NAC),” he wrote.
FASB also plans to address two of the report’s recommendations.
“The Foundation’s PIR team had two specific recommendations relating to efforts to summarize and document cost-benefit considerations and enhancements to user outreach and related documentation,” said Golden. “We view both of these areas as critical to the strengthening of the credibility of our due process efforts, and we appreciate the recommendations. After the issuance of Statement 157, the Board implemented significant process enhancements in both areas. Furthermore, the FASB continues to evaluate, consider, and implement ways to better document cost-benefit considerations and stakeholder outreach, consistent with the recommendation by the Foundation’s PIR team. Thus, while the FASB has made significant progress in those areas since the issuance of Statement 157, they continue to be focus areas for continuous improvement.”