Norwalk, CT, May 22, 2013—The Financial Accounting Foundation (FAF) today announced the completion of the Post-Implementation Review (PIR) of an accounting standard intended to improve the relevance, representational faithfulness, and comparability of information that a company or organization reports about a business combination and its effects.

FASB Statement No. 141 (revised 2007), Business Combinations (Statement 141R) (codified in Accounting Standards Codification Topic 805, Business Combinations), requires an acquiring organization to recognize the assets acquired, the liabilities assumed, and any noncontrolling interest in the acquired organization at the acquisition date, measured at their fair values as of that date, with limited exceptions.

The PIR found that Statement 141R resolved some of the issues associated with the purchase method of accounting for business combinations; that its principles and requirements generally are understandable and can be applied as intended; and that investors generally find the resulting information to be useful.

The review determined that some investors question the reliability of reported information related to assets and liabilities that are difficult to measure at fair value, that result in a bargain purchase, or that may be asset purchases. The review also found that the standard in certain areas introduced more costs and complexity to business combination accounting than FASB had anticipated.

The review of Statement 141R was undertaken by an independent FAF team working under the oversight of the FAF Board of Trustees. The team´s formal report is available at The International Accounting Standards Board (IASB) also is conducting a post-implementation review of International Financial Reporting Standards (IFRS) 3 (revised 2007), Business Combinations, which was issued concurrently with Statement 141R.

"The PIR team performed a robust, independent review of Statement 141R, and we believe that the findings and recommendations will help improve the standard-setting process for the FASB," said FAF President and Chief Executive Officer Teresa S. Polley. "We thank all of the stakeholders from various backgrounds and industries who contributed important feedback to the PIR team on the real-world technical application, operationality, usefulness, and cost-effectiveness of the business combinations standard."

FASB Chairman Leslie F. Seidman said, "The post-implementation review report on Statement 141R identified many positive aspects of the business combinations standard, including the resolution of prior practice issues as well as enhancements in the usefulness of information about a business combination. The report also identified some stakeholder concerns, many of which the Board has already begun to address, for example, push-down accounting and the definition of a business. Because this is a converged standard, we plan to coordinate our review efforts with the IASB."

The Statement 141R review team received input from investors and other financial statement users; preparers of various sizes, industries and levels of experience with the standard; auditors; academics; and financial regulators. The review team reached its conclusions using judgment, considering all the input received, and striving to be objective and balanced. Based on its research, the review team concluded that:

The PIR team also recommended the following improvements to the standard-setting process:

The FAF also announced today that the PIR team will start a review of Statement 157, which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. Stakeholders who would like the opportunity to participate in a PIR survey on Statement 157, conducted by an independent survey firm on behalf of the Financial Accounting Foundation, should register online.

About the Financial Accounting Foundation

The FAF is responsible for the oversight, administration, and finances of both the Governmental Accounting Standards Board (GASB) and the Financial Accounting Standards Board (FASB). 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