Fair Value Option for Financial Instruments

Author: Pat Patterson

Fair value continues to be one of the most judgment-heavy and closely scrutinized areas of financial reporting. This course provides a clear, practical, and up-to-date exploration of U.S. GAAP fair value measurement principles, with a focus on ASC 825's Fair Value Option and its application to financial instruments. Participants will gain an understanding of valuation concepts, financial-instrument classification considerations, required documentation, internal control implications, and audit expectations associated with fair value measurement. The course also examines control objectives, tests of controls, and substantive procedures commonly applied when auditing fair value estimates. Designed for accounting and assurance professionals, this course equips practitioners with the technical knowledge and real-world insights needed to navigate fair value challenges with confidence and accuracy.

Publication Date: April 2026

Designed For
This course is ideal for professionals involved in the preparation, analysis, or audit of financial instruments measured at fair value.

Topics Covered

• Overview of fair value measurement concepts and GAAP framework
• ASC 825 Fair Value Option: qualifying items, required disclosures, and reporting considerations
• Definition and types of financial instruments and their fair value implications
• Control objectives and internal controls related to fair value measurements
• Tests of controls and substantive audit procedures for fair value estimates
• Practical examples, documentation expectations, and common challenges

Learning Objectives

• Explain the objectives and framework of U.S. GAAP fair value measurement
• Distinguish key concepts, definitions, and valuation principles relevant to fair value
• Identify how various types of financial instruments impact financial reporting and related documentation requirements
• Evaluate control objectives, internal controls, and tests of controls applicable to fair value measurements
• Apply ASC 825 Fair Value Option guidance to qualifying items, disclosures, and reporting
• Develop substantive procedures responsive to fair value risks for financial instruments

Level
Intermediate

Instructional Method
Self-Study

NASBA Field of Study
Accounting (2 hours)

Program Prerequisites
General knowledge of accounting for financial instruments

Advance Preparation
None