Project Update
FAS 157—Improving Disclosures about Fair Value Measurements
Last Updated: December 3, 2009 (Updated sections are indicated with an asterisk *)
The staff has prepared this summary of Board decisions for information purposes only. Those Board decisions are tentative and do not change current accounting. Official positions of the FASB are determined only after extensive due process and deliberations.
Project Objective
Due Process Documents
*Decisions Reached at the Last Meeting
Summary of Decisions Reached to Date
*Board/Other Public Meeting Dates
*Next Steps
Background Information
Contact Information
Project Objective
The objective of this project is to improve disclosures about fair value measurements. This project may consider additional disclosures, such as (a) the sensitivity of fair value measurements to changes in assumptions and (b) transfers between the three levels of the fair value hierarchy.
Due Process Documents
On August 28, 2009, the FASB issued a proposed Accounting Standards Update, Fair Value Measurements and Disclosures (Topic 820), Improving Disclosures about Fair Value Measurements. The proposed Update would improve Fair Value Measurements and Disclosures—Overall Subtopic (Subtopic 820-10) of the FASB Accounting Standards Codification™. The proposed Update would affect all entities that are required to make disclosures about recurring and nonrecurring fair value measurements. The comment letter deadline on the proposed Update was October 12, 2009.
*Decisions Reached at the Last Meeting (November 11, 2009)
The Board discussed comments received on the proposed Accounting Standards Update on improving disclosures about fair value measurements. The Board directed the staff to draft a final Accounting Standards Update for a vote by written ballot.
The Board decided to defer the consideration of the Level 3 sensitivity disclosures but proceed with all of the remaining requirements substantially as described in the proposed Update. The FASB plans to reconsider the Level 3 sensitivity disclosure requirements in the joint fair value measurement project. The final Update will amend Subtopic 820-10 as follows:
- New disclosure requirements
- Transfers in and out of Levels 1 and 2. A reporting entity shall disclose separately the amounts of significant transfers in and out of Levels1 and 2 fair value measurements and describe the reasons for the transfers.
- Activity in Level 3 fair value measurements. In the reconciliation for fair value measurements using significant unobservable inputs (Level 3), a reporting entity should present separately information about purchases, sales, issuances, and settlements (that is on a gross basis rather than as one net number).
- Clarification of existing disclosure requirements:
- Level of disaggregation. A reporting entity should provide fair value measurement disclosures for each class of assets and liabilities. A class is often a subset of assets or liabilities within a line item in the statement of financial position. A reporting entity should apply judgment in determining the appropriate classes of assets and liabilities.
- Disclosures about inputs and valuation techniques. A reporting entity should provide disclosures about the input and valuation techniques used to measure fair value for both recurring and nonrecurring fair value measurements. Those disclosures are required for fair value measurements that fall in either Level 2 or Level 3.
The final amendments to the Accounting Standards Codification will be effective for annual or interim reporting periods beginning after December 15, 2009, except for the requirement to provide the Level 3 activity for purchases, sales, issuances, and settlements on a gross basis. That requirement will be effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years.. Early adoption is permitted. The amendments in the Update do not require disclosures for earlier periods presented for comparative purposes at initial adoption. The Board expects to issue a final Update by the end of 2009.
Summary of Decisions Reached to Date (As of November 11, 2009)
See above.
*Board/Other Public Meeting Dates
The Board meeting minutes are provided for the information and convenience of constituents who want to follow the Board's deliberations. All of the conclusions reported are tentative and may be changed at future Board meetings. Decisions become final only after a formal written ballot to issue a final standard.
| *November 11, 2009 | Board Meeting—Discussion of Comment Letters and Redeliberations of Proposed Update |
| August 5, 2009 | Board Meeting—Discussion of feedback received from field study |
| May 27, 2009 | Board Meeting—Proposal to Improve Disclosures Required by FASB Statement No.157, Fair Value Measurements |
*Next Steps
The Board has instructed the staff to proceed with the drafting of a final Update for a vote by written ballot.
Background Information
At the February 18, 2009 meeting, Chairman Herz announced the addition of new FASB agenda projects intended to improve the application guidance used to determine fair values under Statement 157 and the disclosures about fair value measurements. These projects were added in response to recommendations contained in the Securities and Exchange Commission’s recent study on mark-to-market accounting, as well as input provided by the FASB’s Valuation Resource Group, and other constituents.
Contact Information
Bob Bhave
Project Manager
bbhave@fasb.org
Kristofer Anderson
Practice Fellow
keanderson@fasb.org
Adrian Mills
Practice Fellow
aemills@fasb.org