Discussing fair value in the MD&A

Assist preparers in improving the MD&A discussion around fair value measurements and disclosures.

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Preparers want to know how to discuss fair value in the MD&A. Fair Value Discussions in the MD&A will help you enhance your discussion of fair value in the MD&A.

You will learn about:

  • when to distinguish between historical cost and fair value measures in the profit analysis
  • a larger class of valuation factors to consider when explaining performance
  • analyzing realized and unrealized amounts, separately from changes in valuation parameters
  • considering how fair value balances have changed for reasons other than market forces
  • when it may be appropriate to identify realized yield, as well as fair value yield, on assets and liabilities
  • when it may be appropriate to provide an integrated analysis of all related fair value measurements and disclosures

In addition:

Enhance discussions of fair value disclosures through various means, including:

  • explaining that fair value is a buyer’s price and discussing its decision relevance to the entity
  • identifying participants in relevant markets used to determine fair value
  • being precise in quantitative disclosures
  • identifying factors that have caused changes in fair values in user-friendly terms
  • identifying the holdings of various levels of assets and liabilities by business units
  • relating Level 3 income or loss to the entity as a whole