Question

Read the most recent IASB Board Meeting Summaries, discuss one topic that you found. What do you think the impact (of this particular topic) might be on U.S. companies if the United States adopts IFRS?

Answer 1

As per the Pre-meeting summaries for the June IASB meeting, On Tuesday 19 June the IASB and the US FASB held a joint education meeting in which Fair Value Disclosure differences were discussed. The FASB has developed amendments to the disclosure requirements for fair value measurements which it plans to finalise, by updating Topic 820, in the third quarter of 2018. The FASB provided an overview of those changes.

Both IFRS 13 and ASC 820 require the disclosure of the valuation techniques used to estimate Level 2 and Level 3 FV, and quantitative disclosures regarding the significant unobservable inputs used to estimate Level 3 FV. The standards differ however in the requirements related to the disclosure of FV sensitivity to changes in unobservable inputs. IFRS 13 requires a qualitative analysis of the sensitivity of Level 3 estimates to changes in unobservable inputs, as well as a quantitative analysis of the possible alternate Level 3 estimates, if changes to valuation inputs were to occur. ASC 820 only requires the qualitative analysis (ie description). Thus the effect on the US companies once they adopt IFRS for Fair Value would bethat they have to fulfill requirements related to the disclosure of FV sensitivity to changes in unobservable inputs.

sources: https://www.iasplus.com/en/news/2018/06/iasb-premeeting-summaries and https://www.ifrs.org/-/media/feature/meetings/2018/january/iasb/ap7c-ifrs-13-literature-review.pdf

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