Accounting and Reporting Changes Affecting nfp's Part I - FAS 157

On Tuesday, April 28, 2009, Janet Ramey of Brown Smith Wallace discussed the implications of FAS 157, which was issued in September, 2006 and which is effective for fiscal years that begin after November 15, 2007. FAS Statement 157 provides a framework to measure fair value. But first, it provides a definition of fair value:

"The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date."


FAS 157 then sets out three levels of information by which fair value is determined.

1. - transactions for same item that are observable from active independent markets
2. - observable market inputs
3. - no observable market

As usual, consistency and documentation are critical in substantiating fair value techniques.