CUNA Regulatory Comment Call


July 21, 2004

FASB Draft Guidance on Calculation
of Fair Value Measurements

EXECUTIVE SUMMARY

DESCRIPTION OF THE PROPOSED STATEMENT

Definition of "Fair Value"

Valuation Techniques

Fair Value Hierarchy

Disclosures

QUESTIONS REGARDING THE PROPOSED
FAIR VALUE GUIDANCE

    Definition of Fair Value

  1. Will credit unions be able to consistently apply the fair value measurement objective using the guidance provided by this proposed statement together with other applicable valuation standards and generally accepted valuation practices?

    Yes ______ No ______

    If not, what additional guidance is needed?
















  2. Valuation Techniques

  3. This proposed Statement would clarify and incorporate the guidance contained in FASB Concepts Statement No. 7, Using Cash Flow Information and Present Value in Accounting Measurements, for using present value techniques to estimate fair value (Appendix A). That FASB Concepts Statement is available on the FASB website at http://www.fasb.org/pdf/con7.pdf. Is that guidance sufficient?

    Yes ______ No ______

    If not, what additional guidance is needed?
















  4. Active Markets

  5. This proposed Statement would clarify the valuation techniques used to estimate fair value should emphasize market inputs, including those derived from active markets. In this proposed Statement, active markets are those in which quoted prices are readily and regularly available; readily available means that pricing information is currently accessible and regularly available means that transactions occur with sufficient frequency to provide pricing information on an ongoing basis. Is that guidance sufficient?

    Yes ______ No ______

    If not, what additional guidance is needed?
















  6. Valuation Premise

  7. This proposed Statement would provide general guidance for selecting the valuation premise that should be used for estimates of fair value. Appendix B illustrates the application of that guidance (Example 3). Is that guidance sufficient?

    Yes ______ No ______

    If not, what additional guidance is needed?
















  8. Fair Value Hierarchy

  9. This proposed Statement would establish a hierarchy for selecting the inputs that should be used in valuation techniques used to estimate fair value. Those inputs differ depending on whether assets and liabilities are identical, similar, or otherwise comparable. Appendix B provides general guidance for making those assessments (Example 4). Is that guidance sufficient?

    Yes ______ No ______

    If not, what additional guidance is needed?
















  10. Level 1 Reference Market

  11. In this proposed Statement, the Level 1 reference market is the active market to which an entity has immediate access or, if the entity has immediate access to multiple active markets, the most advantageous market. Appendix B provides general guidance for selecting the appropriate reference market (Example 5). Is that guidance sufficient?

    Yes ______ No ______

    If not, what additional guidance is needed?
















  12. Level 3 Estimates

  13. This proposed Statement would require that in the absence of quoted prices for identical or similar assets or liabilities in active markets, fair value be estimated using multiple valuation techniques consistent with the market approach, income approach, and cost approach whenever the information necessary to apply those techniques is available without undue cost and effort (Level 3 estimates). Appendix B provides general guidance for applying multiple valuation techniques (Examples 6-8). Is that guidance sufficient?

    Yes ______ No ______

    If not, what additional guidance is needed?
















  14. Fair Value Disclosures

  15. This proposed Statement would require expanded disclosures about the use of fair value to remeasure assets and liabilities recognized in the statement of financial position. Appendix B illustrates those disclosures. The proposed Statement also would encourage disclosures about other similar remeasurements that, like fair value, represent current amounts. FASB concluded that those disclosures would improve the quality of information provided to users of financial statements. Do you agree?

    Yes ______ No ______

    If not, why not?
















  16. Effective Date

  17. FASB believes that the effective date provides sufficient time for entities to make the changes necessary to implement this proposed Statement. Do you agree?

    Yes ______ No ______

    If not, please explain the types of changes that would be required and indicate the additional time that would be needed to make those changes.
















  18. Other Issues

  19. This proposed Statement represents the completion of the initial phase of this fair value project. In subsequent phases, FASB expects to address other issues, including issues relating to the relevance and reliability of fair value measurements and the unit of account that should be used for those measurements. Are there any other issues should the Board address?

    Yes ______ No ______

    If so, what are those issues and how should FASB prioritize those issues?


















  20. Other comments?














Eric Richard • General Counsel • (202) 508-6742 • erichard@cuna.com
Mary Mitchell Dunn • SVP & Associate General Counsel • (202) 508-6736 • mdunn@cuna.com
Jeffrey Bloch • Assistant General Counsel • (202) 508-6732 • jbloch@cuna.com
Catherine Orr • Senior Regulatory Counsel • (202) 508-6743 • corr@cuna.com