Fair Value Measurement

• reviewing best practices in the area of valuation techniques, and

The expert advisory panel comprises preparers and users of financial statements, as well as regulators and auditors.

Next due process step

Stage 4: Development and publication of an exposure draft

Based on the comments received on the Fair Value Measurements discussion paper, the Board is developing an exposure draft of an IFRS on fair value measurement guidance. The Board plans to publish an exposure draft in the first half of 2009.

When preparing an exposure draft the Board will consider the requirements of FASB’s Statement of Financial Accounting Standards No. 157 Fair Value Measurements (SFAS 157). However, the IASB’s exposure draft might differ from SFAS 157 in its requirements and wording.

Estimated project completion

The current project plan envisages that an IFRS on fair value measurement guidance will be published in 2010.

Why are we undertaking this project?

IFRSs require some assets, liabilities and equity instruments to be measured at fair value. However, guidance on measuring fair value has been added to IFRSs piecemeal over many years as the Board or its predecessor decided that fair value was the appropriate measurement basis in a particular situation.

As a result, guidance on measuring fair value is dispersed across many IFRSs and it is not always consistent. Furthermore, the current guidance is incomplete, in that it provides neither a clear measurement objective nor a robust measurement framework. The Board believes that this adds unnecessary complexity to IFRSs and contributes to diversity in practice.

Project objectives

The Board’s objectives in the fair value measurement project are:

(a) to establish a single source of guidance for all fair value measurements required or permitted by existing IFRSs to reduce complexity and improve consistency in their application;

(b) to clarify the definition of fair value and related guidance to communicate the measurement objective more clearly; and

(c) to enhance disclosures about fair value to enable users of financial statements to assess the extent to which fair value is used to measure assets and liabilities and to provide them with information about the inputs used to derive those fair values.

To establish a single standard that provides uniform fair value measurement guidance for all fair value measurements required or permitted by IFRSs, conforming adjustments will need to be made to existing guidance dispersed throughout IFRSs. These adjustments might change how fair value is measured in some IFRSs and how the requirements are interpreted and applied.

The project will neither introduce nor require any new fair value measurements.