The International Accounting Standards Board (IASB) today issued IFRS 13 Fair Value Measurement.
IFRS 13 replaces the fair value measurement guidance currently dispersed across different IFRS standards with a single definition of fair value and extensive application guidance. Egbert Eeftink, the leader of KPMG’s global IFRS Valuation and Impairment team, says: “The new standard will facilitate preparers to better describe and users to better understand the fair value measurements applied in financial statements. Fair value measurement concerns were highlighted during the financial crisis and we are pleased that the IASB and FASB have addressed this issue. We support the IASB and FASB efforts to develop a converged standard and achieve a largely common position.”
IFRS 13 provides guidance on how to measure fair value and does not introduce new requirements for when fair value is required or permitted. It also establishes disclosure requirements to provide users of financial statements with more information about fair value measurements.
Developed in a joint project with the US Financial Accounting Standards Board (FASB), the guidance in IFRS 13 is largely converged with FASB’s ASC Topic 820 Fair Value Measurement and Disclosures. Mr. Eeftink notes: “We welcome the IASB’s clarified fair value measurement guidance. IFRS 13 provides a robust framework for entities to use when performing fair value measurements and providing related disclosures. We believe that the fair value disclosures further improve the transparency of fair value measurements used in financial statements.”
“For many companies, the extent of assets and liabilities being measured at fair value is limited. Moreover, we see the fair value definition and guidance in IFRS 13 as being in many cases largely consistent with current practice in IFRS,” observes Mr. Eeftink.