The 72 comment letters submitted to FASB regarding the April 2011 exposure draft reveal two common elements: 1) reducing costs for financial statement preparers, particularly smaller, private companies, is a worthy objective; but 2) the application of a qualitative assessment to impairment testing will be difficult to implement in many instances.
The qualitative assessment to goodwill impairment testing will likely become a frequent discussion topic among preparers, valuation specialists, and auditors during the remainder of 2011. Valuation specialists and preparers should review the final Accounting Standards Update (ASU) along with the comment letters submitted by relevant audit firms, some of which have a more favorable view of the qualitative assessment than others. Ultimately, however, valuation specialists should encourage their preparer clients to reach out to their auditors to start a dialogue over the suitability of a qualitative option for the client.
FASB intends to release the final ASU in September; click here for project updates.