FASB Tackles Stream-Lining, Improving Fair Value Measurement Disclosures(1)

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March 4 — What auditors and investors call sensitivity analysis will undergo more study by the staff of the Financial Accounting Standards Board as the panel seeks to streamline and improve footnote disclosures about fair value measurements of financial instruments, FASB tentatively decided.

The sensitivity disclosures would home in on, for example, a range of change in values should a capital market deteriorate, as the board discussed at its weekly meeting March 4.

A more appropriate term for the sensitivity reporting is “measurement uncertainty analysis,” said Thomas Linsmeier. Measurement uncertainty in the fair values assigned to instruments and investments—particularly when there is a lack of pricing information from active markets—was a common thread through much of the discussions on fair value measurements at the FASB meeting.

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