FASB Proposes More Financial Statement Disclosure for Fairly Valued Securities
The Financial Accounting Standards Board has released a proposal requiring enhanced disclosure for fair valuation of securities under FAS 157. The proposal, if adopted, would require the reporting of the effect of a change in the inputs used to value a Level 3 security to the extent a change in inputs would significantly increase or decrease the security’s fair value measurement. The proposal also requires a description of transfers between Level 1 and Level 2 as well as the disaggregation of Level 3 input data. Comments are due on October 12, and the new disclosure rules are scheduled to become effective for reporting periods ending after December 15.
OUR TAKE: FASB continues its quest to make fair valuation decisions transparent, even if it cannot make them objective. The investment management industry still awaits an SEC position on fair valuation.
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