Due process steps completed
Stage 1: Setting the agenda
In September 2005 the Board added the fair value measurement project to its agenda to establish a single source of guidance that would apply to all fair value measurements required or permitted by IFRSs.
Stage 2: Project planning
This project is being conducted by the IASB only. However, the FASB and the IASB have reaffirmed in the Memorandum of Understanding their commitment to the convergence of US GAAP and IFRSs and to their shared objective of developing high quality, common accounting standards for use in the world’s capital markets. Therefore, the Board decided to use the FASB’s fair value measurement standard, SFAS 157, as the starting point for its deliberations.
As noted above, the scope of this project is limited to developing a single standard that provides guidance for measuring fair value when required or permitted in existing IFRSs. The Board does not see the fair value measurement project as a means of expanding the use of fair value in financial reporting.
Stage 3: Development and publication of a discussion paper
Though a discussion paper is not a mandatory step in the IASB Due Process Handbook, the Board decided that a discussion paper would be an effective vehicle to communicate its preliminary views and engage in a discussion with interested parties about the definition and guidance that will be established in the fair value measurement project. The discussion paper was published in November 2006 and comments were due by 4 May 2007.
The discussion paper set out the Board’s preliminary views of the requirements in SFAS 157 and contained a comparison of existing fair value measurement guidance in IFRSs. The discussion paper contemplated replacing the existing definition of fair value and the related measurement guidance in IFRSs with a definition and guidance that reflects the Board’s preliminary views.
Respondents were asked to comment on the Board’s preliminary views as well as on the requirements in SFAS 157. The Board received 136 comment letters in response to the invitation to comment accompanying the discussion paper.