IASB and FASB Report Progress on Convergence

The International Accounting Standards Board (IASB) and the US Financial Accounting Standards Board (FASB) have published a progress report on their joint convergence projects. Since their previous report in November 2010, the boards have completed five projects. In the next few weeks, the IASB will issue new standards on consolidated financial statements (including disclosure of interests in other entities), joint arrangements and post-employment benefits. Both boards will issue new requirements in relation to fair value measurement and the presentation of other comprehensive income.  In addition, the boards have made progress on the three remaining Memorandum of Understanding (MoU) projects — financial instruments accounting, leasing and revenue recognition — as well as insurance accounting. The boards have also agreed to extend the timetable for the remaining priority convergence projects beyond June 2011 to permit further work and consultation with stakeholders. The convergence projects are targeted for completion in the second half of this year. (Read the full article "IASB and FASB Report Progress on Convergence" at Journal of Accountancy online.

Estimating the Fair Value of Investments

In September 2006, the US Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) 157, Fair Value Measurements (now Accounting Standards Codification [ASC] section 820-10, Fair Value Measurements and Disclosures), with the stated objective of simplifying the measurement and disclosure of fair value information. The application of this guidance to investments in certain nonpublic entities, such as alternative investments, proved more difficult than originally envisioned. Read the CPA Journal article "Estimating the Fair Value of Investments in Entities that Calculate Net Value Per Share" in digital format.

Fair Value: Clarifying the Issues

Drastic events in the credit markets have converted what used to be a technical issue in accounting - fair value - into a public debate and a point of bitter contention in the business community. A White Paper by PricewaterhouseCoopers (PwC) summarizes the key points of the debate and offers a balanced perspective on the issues. The Paper weighs the significant benefits and limitations of reporting fair value; both have been forcefully evident in the past year and continue to emerge. (Read the PwC Paper on Fair Value: Clarifying the Issues.)

Fair Value Accounting: Statement by Paul Cherry, Chair, Canadian Accounting Standards Board

The clarification issued this week by the US Securities and Exchange Commission's Office of the Chief Accountant and the staff of the Financial Accounting Standards Board in relation to fair value accounting requirements is consistent with Canadian accounting standards. In Canada, the Accounting Standards Board has already issued three staff commentaries to help companies apply fair value accounting requirements when dealing with this country's own liquidity crunch. These commentaries provided guidance on how to report to investors on their holdings of Asset-Backed Commercial Paper (ABCP). The first was issued almost a year ago. (View the CICA Media Release and ABCP Commentary.)

Clarifications on Fair Value Accounting

The current market environment makes the determination of fair value particularly challenging for preparers, auditors and users of financial information. In the United States, the Securities and Exchange Commission (SEC) and the Financial Accounting Standards Board (FASB) have engaged in extensive consultations with participants in the capital markets including investors, preparers and auditors, on the application of fair value measurements. The FASB will propose additional interpretative guidance on fair value measurement under US GAAP later this week. (Read the SEC Press Release.)

10Minutes on Fair Value in Financial Reporting

In recent months, severe and progressive declines in the credit markets have rattled the economy, converting what used to be a technical issue into a full-blown public debate: when and how should fair value be developed and reported? A recent publication by PricewaterhouseCoopers called 10Minutes on Fair Value in Financial Reporting clarifies this complicated issue from the perspective of CEOs, CFOs and board members. It also shares ideas for a practical path forward and highlights what companies can do now to improve how fair value is reported to investors.