IASB and FASB Issue Common Fair Value Measurement and Disclosure Requirements
May 12, 2011 (SmartPros) Boards conclude major convergence project with this important element of response to the financial crisis.
The International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) today issued new guidance on fair value measurement and disclosure requirements for International Financial Reporting Standards (IFRSs) and US generally accepted accounting principles (GAAP).
The guidance, set out in IFRS 13 Fair Value Measurement and an update to Topic 820 in the FASB’s Accounting Standards Codification® (formerly referred to as SFAS 157), completes a major project of the boards’ joint work to improve IFRSs and US GAAP and to bring about their convergence.
The harmonisation of fair value measurement and disclosure requirements internationally also forms an important element of the boards’ response to the global financial crisis.
Completion of the project is the culmination of more than five years’ work to improve and align fair value measurement and disclosure requirements. The requirements, which are largely identical across IFRSs and US GAAP, have benefited from extensive due process and public consultation, including input from a Fair Value Expert Advisory Panel and the FASB’s Valuation Resource Group.
The requirements do not extend the use of fair value accounting, but provide guidance on how it should be applied where its use is already required or permitted by other standards within IFRSs or US GAAP.
For IFRSs, IFRS 13 Fair Value Measurement will improve consistency and reduce complexity by providing, for the first time, a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across IFRSs.
For US GAAP, the Update will supersede most of the guidance in Topic 820, although many of the changes are clarifications of existing guidance or wording changes to align with IFRS 13. It also reflects the FASB’s consideration of the different characteristics of public and non-public entities and the needs of users of their financial statements. Non-public entities will be exempt from a number of the new disclosure requirements.
Sir David Tweedie, Chairman of the IASB, said:
Leslie F Seidman, Chairman of the FASB, said:
An IASB podcast, as well as a project summary and feedback statement explaining how the IASB responded to feedback received during the consultation process, are both available from the IASB website. A ‘FASB in Focus’ summary of the project and podcast are available from the FASB website.
The boards intend to hold a joint webcast introducing IFRS 13 and the update to Topic 820. Further details will be published on both websites shortly.2011 SmartPros Ltd. All rights reserved. Source: IASB