FASB leaves window open to fair value reforms

Following an official review of fair value accounting rules that stated the guidelines were generally working as intended, the chairman of the Financial Accounting Standards Board (FASB) said the rules were still up for discussion with stakeholders.

A post-implementation report [PIR] of FAS 157, the section of accounting code that governs fair value reporting, said the standard had not resulted in “any unintended consequences”.

However, the review team acknowledged some stakeholders, including private fund advisors and other private entities, were having their fair value estimates audited in a way that didn’t necessarily sync with normal industry practice.

In a response letter issued this week, FASB chairman Russell Golden said the board “sees no need to undertake a comprehensive review” of FAS 157 given the report’s findings.

“However, the FASB acknowledges the feedback summarized in the PIR report that indicates some stakeholders find certain aspects of Statement 157 to be challenging,” the letter said.

Around fair value accounting, Golden said FASB plans to conduct research and outreach with stakeholders in connection with in-process projects and initiatives, including a project to improve the effectiveness of disclosure notes as well as through its ongoing involvement with the Private Company Council (PCC) and Not-for-Profit  Advisory Committee (NAC).

In a recent comment letter, PE Manager argued the PCC – which was recently assembled to help FASB tweak accounting rules where and when needed for private companies – could be utilized to improve fair value accounting rules for private-sector entities. See right for coverage.