Last week, the Financial Accounting Standards Board issued Accounting Standards Update No. 2010-06 "Improving Disclosures about Fair Value Measurements" ("ASU 2010-06"). ASU 2010-06 amends the FASB's existing Topic 820, Fair Value Measurements and Disclosures, to require expanded disclosures in financial statements about fair value measurements. The new guidance requires entities to disclose:
- additional information regarding assets and liabilities that are transferred between levels of the fair value hierarchy, and
- information in the rollforward of Level 3 securities about purchases, sales, issuances, and settlements on a gross basis.
In addition to these new disclosure requirements, ASU 2010-06 also provides some clarification to existing FASB guidance concerning the level of detail and disaggregation at which fair value disclosures should be made. The ASU also contains some clarifying discussion of the requirements to disclose information about the inputs and valuation methods used in estimating Level 2 and Level 3 fair value measurements.
For the most part, the new disclosure standards in ASU 2010-06 will be effective for interim and annual reporting periods beginning after December 15, 2009. The requirement to separately disclose purchases, sales, issuances and settlements in the Level 3 rollforward, however, becomes effective for fiscal years (and for interim periods within those fiscal years) beginning after December 15, 2010. These disclosure changes are applicable to interim and annual financial statements of investment companies, and audit committees are encouraged to discuss these changes with their fund's audit firm.
The full text of ASU 2010-06 is available at: http://www.fasb.org/cs/BlobServer?blobcol=urldata&blobtable=MungoBlobs&blobkey=id&blobwhere=1175820159088&blobheader=application/pdf