FASB Clarifies Fair Value Disclosure for Nonpublic Entities
January 10, 2013
On January 7 the Financial Accounting Standards Board (FASB) issued an accounting standards update (ASU) that clarifies the scope and applicability of a fair value disclosure exemption specific to private companies and non-public not-for-profit organizations. Comments are due to FASB by January 22.
With the proposed ASU and short comment period, the FASB seeks to quickly remedy a disclosure exemption that is not apparent in Accounting Standards Codification Section 825-10-50-3. The original disclosure requirement was issued in ASU 2011-04, "Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs," and exempts non-public entities from disclosing the level in which a fair value measurement would be categorized (level 1, 2, or 3 in the fair value hierarchy) for assets and liabilities not reported at fair value on the balance sheet but for which disclosure of fair value is required.
According to FASB, a not-for-profit entity, such as an independent college or university, isa public entity if it is a conduit bond obligor for conduit debt securities that are traded in a public market, or if its debt securities are traded in a public market. Consequently, independent colleges and universities without conduit or public debt are considered nonpublic entities by FASB. Although there are fewer nonpublic (independent) higher education institutions than public (independent) institutions, the proposed ASU would exempt nonpublic institutions from disclosing the fair value hierarchy level for certain assets and liabilities that are not required to be measured at fair value in the financial statements, but for which disclosure of fair value remains a requirement. The most common financial statement examples are notes receivable and bonds and notes payable.
The ASU, "Financial Instruments (Topic 825)," would be effective when issued and would add an explanatory paragraph to Codification Section 825-10-50-3, stating:
A nonpublic entity is not required to provide the disclosure in paragraph 825-10-50-10(d) for items disclosed at fair value but not measured at fair value in the statement of financial position.
Director, Accounting Policy
- NACUBO Responds to White House College Affordability Plans
- Recommendations for Completing Form 1098-T
- Preliminary Results Show that College and University Endowments Returned 11.7 Percent in FY13
- 2014 Intermediate Accounting and Reporting - Winter
January 27-28, 2014
- 2014 Endowment and Debt Management Forum
February 5-7, 2014
- 2014 Facilities and Administrative Rates - Long Form
March 3-5, 2014
- WEBCAST: Developing a Market-Informed Approach to Tuition Pricing
Thursday, December 12, 2013 1:00 PM ET
- WEBCAST: How Behavioral Changes Helped Cut Energy Usage in Half
Wednesday, December 18, 2013 1:00 PM ET
- ON-DEMAND: Responsibility Center Management: The Process Necessary to Complete a Successful Implementation
- ON-DEMAND: OD: Responsibility Center Management: How Innovations Have Changed the Nature of RCM
- A Guide to College and University Budgeting: Foundations for Institutional Effectiveness, 4th ed. - by Larry Goldstein
- NACUBO's Guide to Unitizing Investment Pools - by Mary S. Wheeler
- Managing and Collecting Student Accounts and Loans - by David R. Glezerman and Dennis DeSantis