FASB works quickly to clarify nonpublic disclosure exemption


Private companies and nonpublic not-for-profits are exempted from a particular fair value disclosure as a result of a FASB amendment that underwent a speedy review process and was released Thursday.

The amendment clarifies that the requirement to disclose the level of the fair value hierarchy within which the fair value measurements are categorized in their entirety (as Level 1, Level 2, or Level 3) does not apply to private companies and nonpublic not-for-profits for items:

  • That are not measured at fair value in the statement of financial position, but
  • For which fair value is disclosed.

Accounting Standards Update (ASU) No. 2013-03, Financial Instruments (Topic 825): Clarifying the Scope and Applicability of a Particular Disclosure to Nonpublic Entities, makes the clarification. The ASU clarifies guidance in ASU No. 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs.

FASB was notified by stakeholders in December that the 2011 amendments, codified in ASC Section 825-10-50, appeared to be inconsistent with the board’s intentions. FASB decided to expedite the clarification.

The update takes effect immediately.

Ken Tysiac ( ktysiac@aicpa.org ) is a JofA senior editor.


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