FAS 157 Implementation

  • Understand how FAS 157 affects your financial statements

  • Determine which additional financial statement disclosures are required and the information you will need to prepare them

  • Establish responsibility within your organization for implementing FAS 157 and who will participate in the audit process

  • Communicate with your trustee, custodian, independent valuation services or other investment service providers about information they can give to help you determine the fair value of your portfolio’s investments

  • Talk to your auditor about how FAS 157 will affect the next audit and what information they will need to review

  • Give ample time for "alternative" and/or hard-to-value investments

  • Determine whether you need to hire a third party valuation service like DerivActiv to perform valuation services to obtain fair values for portfolio investments

  • Ask your auditor if you’ll need to prepare prior year comparative financial statements

  • Establish and monitor proper internal controls over your portfolio’s financial reporting process related to investment valuations

  • Do not blindly rely on outside service providers; understand the valuation considerations related to your own specific investments. Get involved, and own the process.

  • Lastly, allow a significant amount of time to comply with FAS 157.

Call DerivActiv to get you started with FAS 157 the smart and efficient way.

DerivActiv: 1-866-200-9012

DerivActiv has significant expertise valuing Derivatives, Side Pocket Transactions, Mortgage-Backed Securities, Asset-Backed Securities Pass-Throughs, Mezzanine Debt, Convertibles, Distressed Securities, Collateralized Mortgage Obligations (CMO), Auction Rate Securities, Cash and Synthetic CDO & CDO² Tranches, Credit Linked Notes, Structured Investment Vehicles, Exotic OTC Options, and Complex and Illiquid Securities.

Examples of FAS 157 Implementation Issues

FAS 157 Implementation issues exist for many different asset classes. For example, FASB does not give specific examples for Real Estate Funds (“RE Fund”).  A typical RE Fund example is that a fund owns a 20% equity interest in an interest in an LLC that owns financed real estate, where the real estate is collateral for the debt.  A big FAS 157 question arises when one considers what should be the level of valuation.  Should the real estate and debt be valued as one unit, or should they be treated separately?

Likewise, investment in a fund of funds (FOF) hedge fund presents approximately the same FAS 157 Implementation issues.  The FOF hedge fund invests in other hedge funds that typically invest in a set of investments. Should the underlying indivisible investments be the level at which due diligence to determine FAS 157 fair value occurs?

The FAS 157 implementation issues you have will depend on the types of investments you hold, as well as the general availability of information regarding the fair value measurements of investment portfolios.  If your portfolio holds alternative investments (common or collective trusts, pooled separate accounts, stable value investments, private equity funds, hedge funds, real estate funds, or funds of funds), it is likely that the implementation of FAS 157 will be more challenging.  In such a case, it is important to allow extra time to prepare the investment information and disclosures required under FAS 157.



FAS 157 Accounting
FAS 157 Application
FAS 157 Definition of Fair Value
FAS 157 Derivatives
FAS 157 Disclosure
FAS 157 Disclosure Examples
FAS 157 Effective Date
FAS 157 Guidance
FAS 157 Implementation
FAS 157 Level 1
FAS 157 Mark to Market Accounting
FAS 157 Private Equity
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