FASB to Curtail Fair Value Disclosure Requirements

March 22, 2018

The Financial Accounting Standards Board (“FASB”) has finalized amendments that would prevent companies from disclosing irrelevant and unnecessary information on financial statement footnotes related to how they measure the fair value of select assets and liabilities. Decided at the FASB’s March 7 meeting, the amendments will be based on Proposed Accounting Standards Update No. 2015-350, Fair Value Measurement (Topic 820): Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement. The FASB believes the changes will lower costs for companies and improve disclosures for investors and analysts.

Companies will have to adopt the amended disclosure requirements for fiscal years and interim periods beginning after December 15, 2019. Early adoption will be permitted, and the FASB agreed that the effective date would be the same for both public and private companies.

Similar to the vote for simplifying the transition method to the new lease accounting standard, Harold Schroeder was the lone member to disagree with the disclosure rule changes on measuring fair value. Schroeder believed that the FASB should require companies, especially financial institutions, to disclose additional information regarding hard-to-value instruments. Such information helps investors in a recession or market crisis.