A post-implementation review of FASB Statement No. 157, Fair Value Measurements (“SFAS 157”), has concluded that the standard met its objective of providing investors with decision-useful information.
Originally issued in 2006, SFAS 157 defined fair value under GAAP, established a framework for measuring fair value, and detailed how fair value measurements should be disclosed. SFAS 157 also emphasized the importance of using the market participant perspective to determine fair value and aimed to increase the comparability of fair value measurements. Much of the original guidance from SFAS 157 is now contained in Accounting Standards Codification Topic 820.
The post-implementation review team noted that the most useful disclosure for decision-making purposes appears to be the description of the inputs and valuation techniques used to measure fair value. The review also suggested that the implementation of the standard has been generally successful and that the standard did not result in any significant unintended consequences.
The review did observe, however, that stakeholders at smaller entities have complained about increased audit and regulatory costs which they attribute to SFAS 157. Some feedback on the standard also questioned the usefulness of SFAS 157 for the various users of financial statements, including employee benefit plans, not-for-profit entities, and privately owned companies. Although FASB does not intend to undertake a comprehensive review of SFAS 157, it will study the relevance of the information that the statement requires and consider ongoing cost-benefit issues.
Mercer Capital has considerable experience in providing fair value measurements for a wide variety of entities and instruments. Please contact us to discuss your fair value reporting needs in confidence.
- FASB: Summary of Statement No. 157
- Fair Value Accounting Standard Gets Mixed Review | Accounting Today (subscription required)
- FASB to research fair value standard’s relevance for certain investors | Journal of Accountancy
- 5 Things to Know About Proposed Changes to ASC Topic 820 | Mercer Capital
- Fair value standard fulfills purpose, review finds | Journal of Accountancy
- Post Implementation Review Report: FASB Statement No. 157, Fair Value Measurements | Accounting Foundation
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