Now that users of financial statements have had a chance to study fair value measurements under the still relatively new three-level hierarchy, they’re looking for more disclosures.

The Financial Accounting Standards Board is proposing an Accounting Standards Update to the disclosures around fair value measurements to give greater insight into the sensitivity of various assumptions that go into model-based measurements. They’re also looking for more information about movement of instruments among the three levels and more gross information about purchases, sales, issuances and settlements for instruments that are measured using models.

FASB said the proposed update to accounting standards would improve on the requirements of ASC 820-10, which became effective in early 2008 as Financial Accounting Standard No. 157: Fair Value Measurements. FAS 157 defined fair value as a market-based method of measuring value based ideally on market prices for the same or similar assets and liabilities. Instruments measured at Level 1 are indexed to current market prices while Level 2 measurements represent a mix of market prices and management assumptions. Those measured at Level 3 can rely solely on assumptions and pricing models.

Inspired by users of financial statements, the disclosures would flesh out more information about instruments measured at Level 3 of the fair value hierarchy, where entities rely almost entirely on unobservable information or internal modeling to establish values, FASB said. The proposal also would require entities to provide more segregated information for different classes of assets and liabilities that are determined according to their nature and risk characteristics, as well as their placement in the hierarchy.

In its proposal, FASB says it believes users will benefit by getting information that amounts to a range of fair value if an entity were to use reasonably possible alternatives for model-based measurements and transfer instruments among the three levels of the hierarchy. The proposal is open to comment through Oct. 12. The board expects to finalize the requirements in time for it to be effective for interim and annual periods ending after Dec. 15, except for the sensitivity disclosures, which would be effective the following quarter.