Valuation Resource Group (VRG)

Last Updated: October 21, 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.

*Objective
*Issues Discussed to Date
*Valuation Resource Group Members
History and Background
Contact Information

Objective

In step with its mission to improve and enhance the quality, consistency, and comparability of financial statements, the FASB continues to assess whether and to what extent additional and more specific valuation guidance is needed for financial reporting purposes beyond the guidance provided inAccounting Standards Codification Topic 820-Fair Value Measurements and Disclosures (formerly FASB Statement No. 157). The Board seeks to solicit the views of its constituents through the formation of a resource group tasked with assisting the Board in matters involving valuation for financial reporting purposes.

The Valuation Resource Group (VRG) provides the Board and FASB staff with information on existing implementation issues related to fair value measurements used for financial statement reporting purposes and the alternative viewpoints that may be associated with those implementation issues. VRG meetings include a private session with FASB staff and a public session with the Board. The VRG does not make any authoritative decisions. Any authoritative decisions are subject to the FASB’s normal due process, including open deliberation by the Board.

The most recent meeting of the VRG took place on September 22, 2009. The VRG held a session with the FASB Board from 3:00 to 5:00 p.m. that was open to the public. Constituents may listen to that session via webcast and minutes from the public session with the Board are posted below.

*Issues Discussed to Date

The issues discussed at the  September 22, 2009  meeting include:

Measurement of Core Deposits

Proposed Accounting Standards Update, Improving Disclosures about Fair Value Measurement

IASB’s May 2009 Exposure Draft, Fair Value Measurement

Fair Value of Debt versus Par Value of Debt when Estimating the Fair Value of an Entity’s Equity

The issues discussed at the February 5, 2009 meeting include:

The SEC Study on Mark-to-Market Accounting

Proposed FASB Staff Position (FSP) FAS 157-c, Measuring Liabilities under Statement No. 157

The AICPA Draft Issues Paper, FASB Statement No. 157 Valuation Considerations for Interests in Alternative Investments

Goodwill Impairment Considerations

The issues discussed at the September 23, 2008 meeting include:

The IASB Expert Advisory Panel White Paper: “Measuring and disclosing the fair value of financial instruments in markets that are no longer active”

Fair Value Disclosures

Observable vs. Unobservable Inputs

Fair Value Measurement of Liabilities under FAS 157

Allocation of In-Use Valuation to Individual Unit of Account

rued Liabilities

Identification and Allocation of Market Participant Synergies

Fair Value of a Noncontrolling Interest and a Previously Held Equity Interest

The issues discussed at the May 8, 2008 meeting include:

Observable vs. Unobservable Fair Value Measurements in the Current Credit Environment

Determining Whether a Discount should be Applied for a Restriction on Sale

Employee Benefit Plans

Contingent Liabilities

The issues discussed at the February 1, 2008 meeting include:

Accounting for assets that the acquirer does not intend to use or intends to use in a way other than its highest and best use

Overlapping customer relationships

Valuation of intangible assets using "current replacement cost"

Meaning of "legally permissible" in assessing highest and best use

Allocation of portfolio based credit adjustments for hedge effectiveness testing

The issues discussed at the November 9, 2007 meeting include:

Deferral of the effective date of FASB Statement No. 157, Fair Value Measurement

Development of market participant assumptions and use of an entity's own data (similar to issue discussed at October 1, 2007 meeting)

Unit of valuation and exit markets, whether unit of valuation can be more disaggregated than the unit of account (similar to issue discussed at October 1, 2007 meeting)

Measurement of liabilities

Applicability of Statement 157 to plan assets of pensions and other postretirement benefit plans (similar to issue discussed at October 1, 2007 meeting)

Use of NAV to measure investments in fund of fund or certain investments with restrictions (similar to issue discussed at October 1, 2007 meeting)

Determining the fair value of a liability with a third-party guarantee

Highest and best use - land example

Definition of significant in determining the level in the fair value hierarchy

Accounting for Transaction Costs in Determining the Fair Value of an Investment

The issues discussed at the October 1, 2007 meeting include:

Determining the fair value of an asset in which the entity intends to transform the asset from its current form into a different form upon sale (such as whether to value a mortgage loan in the whole loan market vs. the securitization market)

Definition of an active market

Determination of the principal market when the majority of an entity’s trading activity occurs in a different market than where the majority of market participants’ trading occurs.

Highest and Best Use: Accounting for an asset that an entity does not intend to use or intends to use defensively

Determination of market participants (such as assets or entities acquired in an auction)

Assets and liabilities without markets

Pension plan disclosures

Use of net asset value to measure certain investments, such as in private equity.

The FASB staff will evaluate which, if any, of these issues to present to the Board for their consideration to add to its technical agenda. Based on the discussions and information provided by the VRG, the FASB has added several projects to its agenda to provide additional guidance to constituents. These projects address:

Determining when a market for an asset or a liability is active or inactive;

Determining when a transaction is distressed;

Applying fair value to interests in alternative investments, such as hedge funds and private equity funds; and,

Improving disclosures about fair value measurements will consider requiring additional disclosures on such matters as sensitivities of measurements to key inputs and transfers of items between the fair value measurement levels.

*Valuation Resource Group Members

Paul Barnes (valuation)

Muneera Carr (preparer)

Don Charles (valuation)

Frank Ciccotto (valuation)

Michael DeLuke (valuation)

Wallace Enman (user)

Anita Ford (accounting)

Greg Forsythe (valuation)

Carla Glass (valuation)

Gordon Goodman (preparer)

David Larsen (preparer)

Michael Mard (valuation)

Jerry Mehm (valuation)

Andreas Ohl (accounting)

Greg Ramsey (IMA)

Amy Ripepi (accounting)

Richard Stuart (accounting)

Chris Thorne (valuation)


Gina Weaver (preparer)

Brenna Wist (accounting)

Hilary Eastman (observer)

Greg Fletcher (observer)

Shelly Luisi (observer)

Yelena Mishkevich (observer)

Dan Noll (observer)

Laurie Fitzpatrick Priest (observer)


Greg Scates (observer)

Evan Sussholz (observer)

Duff & Phelps

Suntrust Banks, Inc.

Ernst & Young

Standard and Poor’s

Houlihan, Lokey, Howard, & Zukin

Moody’s Investors Services

Clifton Gunderson

Deloitte

Hill Schwartz Spilker Keller LLC

Occidental Petroleum

Duff & Phelps

The Financial Valuation Group

American Appraisal

PricewaterhouseCoopers

Fannie Mae

Financial Reporting Advisors

McGladery & Pullen

International Valuation Standards Council

Pfizer

KPMG

IASB

PCAOB

SEC

AICPA

AICPA

Federal Reserve Board of Governors

PCAOB

SEC

History and Background

In January 2007, the FASB issued an Invitation to Comment seeking views from constituents on (a) the need, if any, for valuation guidance related to the use of fair value measurements in financial reporting, (b) who should be involved in developing any such valuation guidance, and (c) the process and form of any such guidance-setting activities. Over 80 comment letters were received and posted to the FASB website. Additionally, the Board held a Public Roundtable on April 30, 2007 to enable constituents to elaborate on and discuss the issues raised in the Invitation to Comment. The Board issued a press release on June 21, 2007 announcing the formation of a resource group to address issues relating to valuation for financial reporting. The resource group has met on October 1, 2007, November 9, 2007, February 1, 2008, May 8, 2008, and September 23, 2008 to discuss issues surrounding the implementation of Accounting Standard Codification Topic 820-Fair Value Measurements and Disclosures (formerly FASB Statement No. 157).

Contact Information

Kristofer Anderson
Valuation Fellow
keanderson@fasb.org

Bryan Davis
Postgraduate Technical Assistant
bpdavis@fasb.org

Additional Details