FASB Staff Position (FSP 157-3) Addresses Inactive Markets
October 23, 2008
In response to current market conditions, the FASB has issued a final staff position (FSP) FAS 157-3, "Determining the Fair Value of a Financial Asset When the Market for That Asset is Not Active." Although the FASB made the FSP immediately effective, independent institutions will not need to consider the FSP until fiscal year 2009.
In an unprecedented action, FASB released the FSP the day after a short seven-day exposure period. FSP 157-3 applies to financial assets subject to the fair value accounting requirements of FASB Statement 157, "Fair Value Measurements." Recent market conditions created the need to clarify the guidance in SFAS 157 for inactive markets. The FSP provides an example that illustrates the following SFAS 157 principles in determining the fair value of a financial asset when the market for that financial asset is not active.
- What a normal price means during inactive markets rather than using forced liquidations or distressed sales
- The use of a reporting entity’s own assumptions that consider the availability of observable inputs
- Broker quotes that may result from models with inputs available only to the broker rather than inputs resulting from market transactions
Again, independent colleges and universities would need to consider the FSP if inactive market conditions exist during the fiscal year 2009 reporting period.
Staff resource: Sue Menditto
- ED Proposes Substantial Expansion of Financial Responsibility Indicators
- Supreme Court Hands Down Two Decisions with Higher Education Implications
- NACUBO Objects to Annual SFA Audits
- 2016 CAO and CBO Collaborations
August 1-2, 2016
- 2016 Planning and Budgeting Forum
September 19-20, 2016
- 2016 Managerial Analysis and Decision Support
November 17-18, 2016
- WEBCAST: The CBO's Role in Diversity and Inclusion on Campus
Thursday, June 30, 2016 1:00 PM ET
- ON-DEMAND: The Clery Act: Strategic Planning to Mitigate Institutional Risk
- ON-DEMAND: Title IX: Key Issues Surrounding Institutional Compliance
- ON-DEMAND: NACUBO Live! Higher Education Accounting Forum
- ON-DEMAND: Responsibility Center Management: Two Different Perspectives