NEWS RELEASE 11/29/11
FASB Chairman Adds an Agenda Project on Fair Value Measurement Disclosures for Private Companies and Not-for-Profit OrganizationsNorwalk, CT, November 29, 2011—The Financial Accounting Standards Board (FASB) has added to its agenda a project to assess the feasibility of reducing or eliminating certain fair value measurement disclosure requirements for private companies and not-for-profit organizations. The decision by FASB Chairman Leslie F. Seidman to add the agenda project was based on comments received during private company roundtable discussions held in October.
The project will evaluate the need for existing disclosure requirements for private companies and not-for-profits for fair value measurements categorized within Level 3 of the fair value hierarchy. Level 3 refers to fair value measurements that are determined using significant unobservable inputs, such as expected future growth rates. The project will include conducting targeted outreach to private company and not-for-profit stakeholders, particularly investors, lenders, donors, and other users, to assess the relevance of existing Level 3 fair value measurement disclosure requirements.
“FASB selected this project because of pervasive concerns expressed by nonpublic entity stakeholders regarding existing fair value disclosures, particularly that many of the requirements are irrelevant to their financial statement users and are very costly to prepare,” stated Ms. Seidman.
“The input that we received during our recently held private company roundtable discussions was invaluable, and the relevance of existing fair value disclosures was top-of-mind for private companies,” said Marc Siegel, FASB Board member. “Board members felt that a project should be undertaken to further explore whether private companies and not-for-profit organizations should be exempt from providing some disclosures about Level 3 fair value measurements.”
More information about the agenda project is available at www.fasb.org, on the Nonpublic Entity Resources page.
About the Financial Accounting Standards Board
Since 1973, the Financial Accounting Standards Board has been the designated organization in the private sector for establishing standards of financial accounting and reporting. Those standards govern the preparation of financial reports and are officially recognized as authoritative by the Securities and Exchange Commission and the American Institute of Certified Public Accountants. Such standards are essential to the efficient functioning of the economy because investors, creditors, auditors, and others rely on credible, transparent, and comparable financial information. For more information about the FASB, visit our website at www.fasb.org.