FASB Adds Projects on Fair Value, More

At its board meeting earlier today (Feb. 18), FASB Chairman Robert Herz announced the board is adding a number of new projects to its agenda, including - but not limited to - a number of short-term projects on fair value accounting and disclosure (see related FASB press release), and detailed further below. Per Herz’ remarks, here are the projects FASB is adding to its agenda:

Fair Value Accounting
This will be a short term project to try to provide additional application guidance on fair value measurements in the current environment, including:

- determining when a market for an asset or a liability is active or inactive;
- determining when a transaction is distressed; and
- applying fair value to interests in alternative investments, such as hedge funds and private equity funds. Herz noted the NAV project would “consider the measurement basis for Net Asset Values (NAV) for alternative investments, and how that interacts with FAS 157.” He added, “that’s something that a group at the AICPA has been looking at, and [the AICPA] has a paper out for comment, but at our meeting with our Valuation Resource Group, seemed like something we ought to look at as well.” Herz added, “My understanding is the NAV project is pretty short term, [with the] goal of getting guidance [out], particularly for not-for-profits - when they [have] investments with hedge funds, private equity funds- [to get that guidance out] in time for June 30 year-ends.”

Potential additional disclosures under FAS 157
Regarding potential new disclosures, Herz said, “A number of users have asked us [to] includ[e] things like:

- sensitivity analysis,
- transfers between categories"

As to timing of the disclosure project, Herz said, “We’ll have to see what we come up with,” adding if anything, to try to get it “in place 2009 year end, if not sooner.”

He noted this project is in addition to Proposed FSP FAS 107-b which is currently out for comment until March 2nd, which proposes to expand the FAS 107 fair value disclosures for financial instruments to be provided at interim periods, not just annual periods). The fair value projects are described in a press release issued by FASB earlier today.

Other Projects Being Added to FASB Agenda
Other projects Herz said are being added to FASB's agenda include:
- Deferred Tax Assets and Liabilities on certain debt securities
- Real Estate Investment Funds
- Oil and Gas (FAS 69)
- Annual Improvements Project
- Jackpot Liabilities of Casinos
- Consolidation of Noncontrolling Interests (issue to be referred to EITF)

Read more about the above projects here.

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FEI Financial Reporting Blog provides highlights from SEC, PCAOB, FASB, IASB, and other regulatory news, including reporting under Sarbanes-Oxley Sect 404. It is written by Edith Orenstein, Director of Technical Policy Analysis at FEI

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