Fair value measurement is currently being used by governments, but the Governmental Accounting Standards Board (GASB) lacks authoritative guidance in their literature on this topic. To address uncertainties about how to value investments at fair value, the GASB issued a Preliminary Views (PV), Fair Value Measurement and Application. The Preliminary Views presents the GASB’s initial thinking regarding how fair value should be measured, which types of investments should be measured at fair value, and the related note disclosures that should be provided.
In its September 30, 2013 letter, the American Institute of CPAs’ State and Local Government Expert Panel expressed its support of the measurement concepts in the GASB Preliminary Views, but expressed concerns with the proposed definition of an investment both in terms of its clarity and intended scope. The Panel recommended the Board reexamine the proposed definition and consider separating the measurement and application aspects of the project going forward.
On November 1, 2013, the chairman and staff of the Panel participated in a GASB public hearing on this topic. In their testimony, the Panel representatives emphasized the key points in the AICPA testimony and responded to GASB members’ questions.