POST IMPLEMENTATION REVIEW CONCLUDES FAIR VALUE ACCOUNTING STANDARD MEETS ITS OBJECTIVES


Norwalk, CT, February 25, 2014—A 2006 accounting standard that established a framework for measuring fair value within U.S. generally accepted accounting principles (GAAP) generally achieves its purpose. That was the central conclusion of the post-implementation review (PIR) of Financial Accounting Standards Board (FASB) Statement No. 157, Fair Value Measurements.

Statement 157 provides a single definition of fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. Statement 157 does not change existing U.S. GAAP requirements that specify which items organizations should measure and report at fair value.

Financial Accounting Foundation (FAF) President and CEO Teresa S. Polley said, “On behalf of the FAF and the FASB, I’d like to thank the stakeholders who helped the PIR team assess the application, usefulness, and effectiveness of the fair value accounting and financial reporting standard for public and private companies and not-for-profit organizations.”

FASB Chairman Russell G. Golden said, “The post-implementation review report on Statement 157 identified many positive aspects of the fair value standard, most importantly that it met its objectives and did not result in any unanticipated consequences. We are eager to consider the PIR team’s findings and anticipate providing our initial response in the coming weeks.”

The PIR team limited its review to Statement 157 and how fair value is measured and did not include other standards that require the use of fair value either for measurement or disclosure purposes. The PIR team received input from investors and other financial statement users, as well as from preparers, auditors, and academics. Based on its research the review team concluded: With regard to standard-setting process recommendations, the PIR team recommended that the FASB continue its efforts to summarize and clearly document its cost-benefit considerations in the project files. The PIR team also recommended that the FASB continue its efforts to broaden its outreach activities, identify the most effective means of employing the variety of available outreach methods, and clearly document in the project files the level of stakeholder outreach performed.

The review of Statement 157 was undertaken by an independent team of the FAF, the parent organization of the FASB and the Governmental Accounting Standards Board (GASB). The team’s formal report is available here.

For more information on the PIR process, visit the FAF website.


About the Financial Accounting Foundation

The FAF is responsible for the oversight, administration, and finances of both the Financial Accounting Standards Board (FASB) and its counterpart for state and local government, the Governmental Accounting Standards Board (GASB). The Foundation is also responsible for selecting the members of both Boards and their respective Advisory Councils.

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 http://www.fasb.org/.