SEC Staff Issues Statement on Fair Value Measurement and Disclosure Considerations for Private Assets

At a Glance

• On September 28, 2026, the Staff of the SEC's Office of the Chief Accountant and Division of Investment Management issued a joint statement reinforcing existing fair value measurement and disclosure requirements for private assets, with a focus on private credit investments by interval funds, tender offer funds, business development companies, and private funds registered under the Securities Exchange Act of 1934.
• The statement reiterates key considerations for valuing private credit assets and the importance of appropriately tailored, transparent disclosures.
• The statement also highlights management's ultimate responsibility for assessing the use of reported net asset value as a practical expedient and underscores the auditor's role in enhancing the credibility of fair value information.

Against the backdrop of significant growth of investments in private assets in recent years and the expansion of investor access to private assets through vehicles such as interval funds, tender offer funds, and business development companies (BDCs), on September 28, 2026, the Staff of the US Securities and Exchange Commission's Office of the Chief Accountant and Division of Investment Management issued a joint statement (Statement). The Statement reinforces existing fair value measurement and disclosure requirements under Financial Accounting Standards Board Accounting Standards Codification Topic 820, Fair Value Measurement, and the related regulatory framework under the Investment Company Act of 1940, as amended, with a particular focus on private credit.

The Statement focuses on four areas: key considerations for valuing private credit assets; material disclosures concerning fair value measurements and portfolio risk and performance characteristics; use of reported net asset value (NAV) as a practical expedient; and the auditor's role in enhancing the credibility of fair value information.

Although the Statement highlights the significant growth in private credit investments made through interval funds, tender offer funds, and BDCs, the Staff also reminds readers that the Statement is relevant to all registrants with exposure to private credit assets.

Key Takeaways

Private Credit — Valuation Reminders

The Statement highlights three important considerations in measuring the fair value of private credit assets: the sufficiency of information and management's related responsibility, the market participant perspective, and robust calibration practices.

1. Sufficiency of Information and Management's Related Responsibility

The Statement identifies timely access to relevant information as critical to fair value measurement because that information forms the basis for valuing private credit assets. The Staff highlights the importance of management assessing whether the reporting provisions underlying private credit arrangements, including the cadence, quantity, and quality of information provided, are sufficient to support ongoing monitoring and financial reporting, and reminds management that a lack of timely information does not relieve its responsibility to estimate fair value.

2. Market Participant Perspective

The Statement reinforces the requirement that management supplement and adjust borrower-specific information with reasonably available information that a market participant would consider when pricing private credit assets to help ensure that the measurement reflects a market-based perspective. The Statement notes that such information may include the broader market environment, prevailing credit spreads, liquidity conditions, and the compensation a market participant would demand for bearing the risks associated with an investment.

3. Robust Calibration Practices

The Statement also reminds management of the requirement to calibrate the valuation techniques on an ongoing basis to ensure they reflect current market conditions. The Staff observes that robust calibration practices may include periodically reassessing model outputs against available market information, such as comparable transactions, public market equivalents, secondary market indications, or relevant credit indices, to help ensure valuation conclusions continue to reflect market participant assumptions and evolving conditions.

Private Credit — Disclosure Reminders

The Statement reminds registrants of the specific disclosure requirements for Level 3 fair value measurements, and for the risk and performance characteristics of private credit portfolios.

Fair Value Measurement Disclosures

The Statement reiterates the disclosure requirements for recurring Level 3 fair value measurements, including the valuation techniques used, significant inputs considered, and how changes in those inputs might significantly impact the reported fair value. The Staff emphasizes that disclosures should be clear, entity-specific, and appropriately tailored, rather than boilerplate or overly aggregated.

Private Credit Portfolio Risk and Performance Disclosures

The Statement reminds registrants of the disclosure requirements for investment portfolios under US generally accepted accounting principles and Regulation S-X, including investment types, industry and geographic regions, and certain asset characteristics. The Staff has observed the following best practices for the types of disclosures that may be material to investors:

• Disclosure of subsequent developments involving private credit assets, such as modifications, restructurings, extensions, or periods of nonaccrual
• Clear disclosure of nonaccrual and nonperforming investments, including the criteria used for classification, the timing of nonaccrual, and accounting for previously accrued but uncollected interest
• Clear disclosure of payment-in-kind (PIK) interest, including when and how it is recognized, the portion of reported income it represents, and its relevance to the borrower's financial condition or potential increases in credit risk

Use of NAV as a Practical Expedient

The Staff recognizes that management may use NAV reported by an investee as a practical expedient to estimate an investment's fair value, but underscores the conditions required for doing so and reminds management that the use of NAV as the practical expedient is optional on an investment-by-investment basis, even when the required criteria are met.

The Staff reminds management that it is ultimately responsible for assessing whether use of the reported NAV meets the required criteria and encourages an iterative, evidence-based process that identifies relevant information, evaluates its implications, and documents the basis for the conclusion.

Audit Considerations

The Statement emphasizes the importance of auditors' professional skepticism in enhancing the credibility of fair value information, given the complexity and judgment involved in fair value estimates for private credit assets. It highlights auditors' responsibilities under the Public Company Accounting Oversight Board Auditing Standards, including performing robust risk assessments in light of changing circumstances, evaluating the totality of audit evidence, and assessing the reasonableness of significant assumptions and the reliability of source data supporting fair value determinations.

Practical Implications

Although the Statement creates no new obligations, it signals the Staff's focus on robust policies, procedures, and practices for valuing private assets and on material disclosures concerning fair value measurements and private asset portfolio risk and performance. It may also indicate areas of focus for SEC examinations and comment letters. Registrants should review financial statements, shareholder reports, and registration statements for alignment; coordinate proactively with auditors and valuation agents; and monitor further Staff commentary on fair value measurement and disclosure requirements for private assets.

For More Information

For further information, please contact the authors or another member of the investment management team.