NEWS RELEASE 11/29/11
FASB Chairman Adds an Agenda Project on Fair Value Measurement Disclosures
for Private Companies and Not-for-Profit Organizations
Norwalk, 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.