The International Accounting Standards Board (IASB) published for public comment an exposure draft of draft guidance regarding fair value measurement, according to a release from the IASB.
If adopted, these proposals would replace fair value measurement guidance in individual International Financial Reporting Standards (IFRSs) with a single, unified definition of fair value. They will also further the authoritative guidance on the application of fair value measurement in inactive markets. The proposals show how fair value should be measured when it is already required by existing standards. They do not extend its use in any way.
To ensure consistency between the IFRSs and the U.S. generally accepted accounting principles (GAAP), the proposals have incorporated the recent guidance on fair value measurement published by the U.S. Financial Accounting Standards Board (FASB) and are consistent with a report of the IASBs expert advisory panel that was published in October 2008 on fair value measurement in illiquid markets.
This project forms part of a long-term programme by the IASB and the FASB to achieve convergence of IFRSs and US GAAP, as described in the boards Memorandum of Understanding published in September 2008. It is also consistent with requests from G20 leaders to align fair value measurement in IFRSs and US GAAP.
The IASBs starting point for developing the exposure draft was the equivalent U.S. standard, which is the SFAS 157 Fair Value Measurements as amended. The proposed definition of fair value is the same as the definition in SFAS 157 and the supporting guidance is largely consistent with US GAAP.
"This exposure draft is an important milestone in our response to the global financial crisis. It proposes clear and consistent guidance for the measurement of fair value and also addresses valuation issues arising in markets that have become inactive, " said Sir David Tweedie, chairman of the IASB. "The proposed guidance ensures consistency with US GAAP on issues related to fair value measurement and would achieve overall convergence with US GAAP."
The proposals are set out in the exposure draft Fair Value Measurement that is open for comment until Sept. 28. The exposure draft is available on the Open for Comment section on www.iasb.org.
The IASB will be holding a Webcast to introduce the proposals in the exposure draft. It will announce details on its Web site in due course, the release said.