FASB to research fair value standard’s relevance for certain investors

BY KEN TYSIAC

FASB plans to research concerns about the usefulness of its fair value measurements standard for users of financial statements of employee benefit plans, not-for-profits, and private companies.

The concerns arose during a post-implementation review conducted for the board’s parent body, the Financial Accounting Foundation (FAF). The review was completed last month.

Russell Golden, the FASB chairman, announced the board’s intentions Monday in a letter to the co-chairs of FAF’s Standard-Setting Process Oversight Committee.

The review of FASB Statement No. 157, Fair Value Measurements, was largely positive. The review team concluded that the standard meets its objectives and helps preparers provide fair value measurement information that a majority of users can understand and find useful.

But the review also found that some investors question the relevance of the information produced for users of financial statements of employee benefit plans, not-for-profits, and private companies. Golden said this information is consistent with feedback the board received and thoroughly considered while creating Statement No. 157.

Nonetheless, the board will conduct research and outreach on the issue in connection with projects and initiatives that already are in progress. These include the Disclosure Framework Project, the simplification initiative research project, and the research project on accounting issues in employee benefit plan financial statements.

The Private Company Council and the Not-for-Profit Advisory Committee also will be included in the discussion, Golden said.

Golden said the review findings show that there is no need for a comprehensive review of Statement No. 157.

In addition, the review recommended that FASB:

  • Continue its efforts to summarize and clearly document its cost-benefit considerations in its project files. The review of the project found no summary documentation of FASB’s cost-benefit considerations related to Statement No. 157.
  • Continue to broaden its outreach and clearly document in the project files the level of outreach performed.


Because of a lack of documentation, the review team was unable to determine what kind of outreach FASB performed while creating the standard on the issues that emerged as concerns during the review.

“We view both of these areas as critical to the strengthening of the credibility of our due process efforts,” Golden said in the letter. “And we appreciate the recommendations.”

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

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