The Financial Accounting Standards Board (FASB) has issued three final Staff Positions (FSPs) intended to provide additional application guidance and enhance disclosures regarding fair value measurements and impairments of securities.
Although the new FSPs may not have a major direct impact on valuation by healthcare organizations, they could have a major indirect impact to the extent they change how financial institutions and other investment professionals and their auditors approach fair valuation in the current marketplace.
“A key change that the FSPs make to FAS 157 is to flip the presumption about transactions in inactive markets being forced or distressed, so that the transactions would be assumed to be forced or distressed rather than presumed not to be,” said Rick Gundling, HFMA’s Vice President, Thought Leadership. “This gives more management judgment to use models to value illiquid assets and more flexibility in recognizing losses on the income statement.”
Read the FASB press release.
