The SEC has recently adopted amendments to Form ADV and the Investment Advisers Act books and records rule. The amendments require registered investment advisers to provide additional information for separately managed accounts and additional information on the adviser’s advisory business. The amendments also codify umbrella registration requirements for advisers of private funds. The amendments to the Investment Adviser Act rules relate to maintaining certain materials outlining the calculation of the adviser’s performance on managed accounts or securities recommendations.
For additional information on the amendments, please see our white paper on the subject.
Fair Value Measurement
The Financial Accounting Standards Board (FASB) has issued guidance clarifying the difference between a valuation approach and a valuation technique. A valuation approach is identified in Accounting Standards Codification (ASC) 820 as either the cost, market or income approach. A valuation technique is the valuation method used to estimate fair value at the measurement date. An example of a valuation technique used when applying the market approach would be the use of a multiple of revenue for a comparable group of companies to determine a hypothetical enterprise value for a private company. The FASB guidance clarifies that an entity is required to disclose both changes to valuation approach and valuation techniques. Previously, entities may have interpreted the disclosure requirement to apply only to changes in valuation approaches.