During December 2015, the Financial Accounting Standards Board (“FASB”) issued Proposed Accounting Standards Update (“ASU”), Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. The proposed amendments are part of FASB’s disclosure framework project, which seeks to improve the effectiveness of disclosures in the notes to financial statements by requiring clear communication of information that is most important to financial statement users. Certain of the disclosures that would be required by the amendments in this proposed ASU would not be required for private companies.

Under the proposed ASU:
• An entity would provide required disclosures if they are material.
• Phrases such as “an entity shall disclose at a minimum,” which make it difficult to justify omitting immaterial disclosures, would be eliminated.

• The following disclosure requirements would be removed from Topic 820:
a) The amount of and reasons for transfers between Level 1 and Level 2
b) The policy for timing of transfers between Levels
c) The valuation policies and procedures for Level 3 fair value measurements
d) For private companies, the change in unrealized gains and losses for the period included in earnings (or changes in net assets) on recurring Level 3 fair value measurements held at the end of the reporting period.

• The following disclosure requirements in Topic 820 would be modified as follows:
a) For private companies, a reconciliation of the opening balances to the closing balances of recurring Level 3 fair value measurements will no longer be required. However, private companies would be required to disclose transfers into and out of Level 3 of the fair value hierarchy and purchases and issues of Level 3 assets and liabilities.
b) For investments in certain entities that calculate net asset value, require disclosure of the timing of liquidation of an investee’s assets and the date when restrictions from redemption will lapse only if the investee has communicated the timing to the entity or announced the timing publicly.
c) Clarify the measurement uncertainty disclosure to communicate information about the uncertainty in measurement as of the reporting date rather than information about sensitivity to changes in the future.

The FASB is seeking input on the application of the proposed ASU to private companies, employee benefit plans, and not-for-profit organizations. Comments will be accepted through February 29, 2016 and can be submitted to the FASB in one of three ways:

• Using the electronic feedback form available on the FASB website: www.fasb.org
• Emailing a written letter to director@fasb.org, File Reference No. 2015- 350
• Sending written comments to “Technical Director, File Reference No. 2015-350, FASB, 401 Merritt 7, PO Box 5116, Norwalk, CT 06856-5116”

The effective date of the ASU will be determined after the FASB considers feedback on the proposed amendments.

If you have any questions, concerns, or would like additional information on the aforementioned, please contact your HW&Co. Executive.