NEWS RELEASE 05/12/11
IASB and FASB issue common fair value measurement
and disclosure requirements
Boards conclude major convergence project -
important element of response to the financial
crisis
Norwalk, CT, May 12, 2011—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:
The finalisation of this project marks the
completion of a major convergence project and is a fundamentally important
element of our joint response to the global financial crisis. The result is
clearer and more consistent guidance on measuring fair value, where its use is
already required.
Leslie F. Seidman, Chairman of the FASB, said:
This Update represents another positive step
toward the shared goal of globally converged accounting standards. Having a
consistent meaning of the term ‘fair value’ will improve the consistency of
financial information around the world. We are also responding to the request
for enhanced disclosures about the assumptions used in fair value
measurements.
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.
Press enquiries:
Mark Byatt,
Director of Communications, IFRS Foundation
Telephone: +44 (0)20 7246
6472
Email: mbyatt@ifrs.org
Neal McGarity, Director of Communications, Financial
Accounting Foundation
Telephone: (+1) 203 956-5347
Email: nemcgarity@f-a-f.org
Technical
enquiries
Hilary Eastman, Senior Project Manager,
IASB
Telephone: +44 (0)20 246 6470
Email: heastman@ifrs.org
Ben
Couch, Valuation Practice Fellow, FASB
Telephone: (+1) 203 956 5364
Email:
bcouch@fasb.org
Notes
to editors
About the IASB
The
IASB was established in 2001 and is the standard-setting body of the IFRS
Foundation, an independent, private sector, not-for-profit organisation. The
IASB is committed to developing, in the public interest, a single set of high
quality global accounting standards that provide high quality transparent and
comparable information in general purpose financial statements. In pursuit of
this objective the IASB conducts extensive public consultations and seeks the
co-operation of international and national bodies around the world. The IASB
currently has 15 full-time members drawn from 11 countries and a variety of
professional backgrounds. By 2012 the Board will be expanded to 16 members.
Board members are appointed by and accountable to the Trustees of the IFRS
Foundation, who are required to select the best available combination of
technical expertise and diversity of international business and market
experience. In their work the Trustees are accountable to a Monitoring Board of
public authorities.
About the
FASB
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.