FASB working on fair value disclosure exemption for nonpublic entities

BY KEN TYSIAC

FASB is moving quickly to clarify the applicability of a certain fair value disclosure requirement to nonpublic entities.

In a Proposed Accounting Standards Update (ASU), FASB asks for public comment on a clarification that is intended to reduce confusion among stakeholders.

The proposal would amend Accounting Standards Update No. 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs.

If approved, the proposed amendment would clarify that private companies and nonpublic not-for-profits are exempt from the requirement to disclose the level of the fair value hierarchy within which the fair value measurements are categorized in their entirety (Level 1, 2, or 3) for items:

- That are not measured at fair value in the statement of financial position, but

- For which fair value is disclosed.

In December, stakeholders informed FASB that the 2011 amendments, codified in ASC Section 825-10-50, seemed inconsistent with the board’s intent regarding this topic. The stakeholders requested a timely clarification because the exemption relates to nonpublic entities that soon will be issuing financial statements for calendar year 2012. The 2011 amendments took effect for nonpublic entities for annual periods beginning after Dec. 15, 2011.

FASB decided to make the clarification as quickly as possible. Comments are due on the new ASU by Jan. 22, and the clarification would become effective upon issuance.

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

VIDEO

Excel walk-through: Sparklines

Want to liven up your spreadsheets with some color and graphical elements? Kelly L. Williams, CPA, Ph.D., shows how to use Excel sparklines, which illustrate data trends and patterns via small charts that fit in a single Excel cell.

PODCAST

What’s next for potential CPA licensure changes

A new model proposed by NASBA and the AICPA is designed with an eye on the future for newly licensed CPAs. The AICPA's Carl Mayes, CPA, provides background on the project and a look ahead to 2020.