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Business and Policy Areas
Business and Policy Areas

FASB Proposes Changes to Fair Value Disclosures

February 22, 2016

As part of its Disclosure Framework project, the Financial Accounting Standards Board (FASB) has issued a proposed Accounting Standards Update (ASU), "Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement," which would change the current fair value disclosure requirements.

The proposed changes would remove certain disclosures, modify others, and add new ones. The Proposed ASU also draws a distinction between private companies, public entities (including not-for-profit organizations that are conduit bond obligors or that have other publicly traded debt), and nonpublic entities.

The following summarizes the key changes impacting not-for-profits (NFPs) in the Proposed ASU. The following disclosures would be eliminated:

  • The amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy.
  • The valuation policies and procedures for Level 3 fair value measurements.

The following disclosures would be modified:

  • For investments in certain entities that calculate net asset value, an entity would be required to disclose the timing of liquidation of an investee's assets and the date when restrictions from redemption lapse only if the investee has communicated such information.
  • The measurement uncertainty disclosure would reflect information as of the reporting date rather than reflecting information about sensitivity to changes in the future.

The following disclosures would be added:

  • Changes in unrealized gains and losses for the period for recurring fair value measurements for Levels 1, 2, and 3 of the fair value hierarchy, disaggregated by level.
  • For Level 3 measurements, the range, weighted average, and time period used to develop significant unobservable inputs.

Under the proposed guidance, private companies (which do not include NFPs) are exempt from providing the new disclosures and are no longer required to provide a Level 3 rollforward. Those exemptions do not extend to NFPs. In fact, the Proposed ASU does not seem to identify any differences in reporting requirements between public and nonpublic entities. Therefore, nonpublic NFPs would be subject to the same level of disclosure as that of a publicly traded company, potentially resulting in onerous and non-decision useful information being reported.

FASB is specifically asking for feedback from NFPs and employee benefit plans about whether these organizations should be afforded the same exemptions from disclosures as private companies. NACUBO's Accounting Principles Council will submit a comment letter urging FASB to extend the disclosure exemptions proposed for private companies to NFPs. Institutions should consider providing feedback to NACUBO for inclusion in the industry comment letter or respond directly to FASB. Comments can be sent to FASB in the form of a letter or via the electronic feedback form available on the FASB website. Comments are due February 29.


Sue Menditto
Director, Accounting Policy