US and international accounting proposals are being circulated which could impact the way private equity, venture capital and other alternative private investment funds explain how they appraised an asset including real estate. According to a recent story in Pensions & Investments, managers of these funds could face much tougher rules on explaining how they arrived at an asset's value and the methods used to appraise such assets.
The proposed changes are part of an ongoing effort to standardize the way fair-value reporting is handled at the international level. In conjunction with a recent G-20 meeting, both the Financial Accounting Standards Board and the International Accounting Standards Board released exposure drafts of revised fair-value standards. The IASB’s draft focuses on increased transparency about fair-value measurements, including valuation techniques and assumptions made to measure fair value, according to Pensions & Investments. The FASB’s draft would essentially require managers to clearly state how they arrived at fair-value valuations and would more plainly bring U.S. standards in line with international accounting standards, Pensions & Investment reported.
The story can be found: www.pionline.com/apps/pbcs.dll/article