While fair value measurement is currently being used in certain areas by state and local governments, the Governmental Accounting Standards Board (GASB) has issued an Exposure Draft, Fair Value Measurement and Application, to expand its literature on this topic, including how to value investments at fair value.
In its August 15 comment letter to GASB, the American Institute of CPAs’ State and Local Government Expert Panel expressed its general support of the provisions in the Exposure Draft and its appreciation for the proposal’s general alignment to the Financial Accounting Standards Board’s standards on fair value.
However, the Panel strongly encouraged the Board to delay by one-year the proposed effective date to provide governments more time to implement the final standard (i.e., from periods beginning after June 15, 2015, to periods beginning after June 15, 2016). The Panel also questioned the benefit of the proposed transition provisions in the Exposure Draft which would require a full retrospective restatement. The letter contains a number of other comments including alternative thoughts on the treatment of certain interest rate swaps and fixed income investments held to maturity.