FASB PROPOSES EXPANDING FAIR VALUE DISCLOSURES
Norwalk, Conn. - The Financial Accounting Standards Board has issued a set of proposed changes to fair value measurement rules that would require companies to provide more information about illiquid assets.
The disclosures in FASB's exposure draft would provide more information about fair value measurements that use "significant unobservable inputs," known as Level 3 inputs, because they have a greater degree of uncertainty and subjectivity. Level 3 assets are typically illiquid assets whose value may be based on mathematical models. FASB has proposed that companies provide additional disclosures about any significant effects on the fair value of assets if the reporting entity were to use "reasonably possible" alternative inputs or market scenarios.
The rules also would require companies to segregate information for different classes of assets and liabilities based on their nature and risk characteristics, and their placement in the fair value hierarchy. FASB noted that users of financial statements, such as investors, need more robust disclosures about the valuation techniques and inputs used for both Level 2 and Level 3 measurements, because many consider these measurements to be less reliable than Level 1 measurements. The value of Level 1 assets is based on actual market prices, while Level 2 assets can be valued based on the prices for comparable assets in liquid markets.
The deadline for comments is Oct. 12, 2009. For more, visit www.fasb.org.
NUSBAUM, VICEIRA JOIN FAF BOARD OF TRUSTEES
Norwalk, Conn. - Grant Thornton chief executive Edward Nusbaum and Harvard professor Luis Viceira have joined the Financial Accounting Foundation's board of trustees. The FAF oversees the Financial Accounting Standards Board and the Governmental Accounting Standards Board. Nusbaum will take over as CEO of Grant Thornton International on Jan. 1. Viceira teaches investment management and capital markets in Harvard's MBA and doctoral programs.
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