Aug 30, 2011
Completing a five-year project to improve and align fair value and disclosure requirements, FASB and the International Accounting Standards Board (IASB) issued new guidance for IFRS and U.S. GAAP.
The requirements don’t extend the use of fair value accounting, but provide guidance on how it should be applied where its use is already required or permitted by other standards within GAAP or IFRS.
The Accounting Standards Update supersedes most of the guidance in Topic 820, although many of the changes are clarifications of existing guidance or wording changes to align with IFRS 13. It also reflects the FASB’s consideration of the different characteristics of public and non-public entities and the needs of users of their financial statements. Non-public entities will be exempt from a number of the new disclosure requirements.
“This update represents another positive step toward the shared goal of globally converged accounting standards,” FASB Chair Leslie Seidman said. “Having a consistent meaning of the term ‘fair value’ will improve the consistency of financial information around the world. We are also responding to the request for enhanced disclosures about the assumptions used in fair value measurements.”
To improve the consistency in application across jurisdictions, some changes in wording were necessary to ensure that U.S. GAAP and IFRS fair value measurement and disclosure requirements are described in the same way (for example, using the word shall rather than should to describe the requirements in U.S. GAAP).