The SEC staff’s September reminder centers on calibration, market inputs, NAV, and audit evidence, the same areas that shape year-end valuation work.
On September 28, 2026, SEC Chief Accountant Kurt Hohl and Division of Investment Management Director Brian Daly issued a joint staff statement on fair value measurement and disclosure for private assets. The statement describes itself as a “critical reminder” that registrants maintain rigor over how private assets are valued and disclosed.
Private credit is the focus, but the reach is broader. The staff states that its reminders apply to all registrants with exposure to private credit assets. The statement also addresses the use of net asset value (NAV) for fund interests acquired in the secondary market, and the role of auditors in evaluating fair value estimates.
The statement creates no new rules. It does, however, arrive as fund finance teams prepare 12/31 marks, and its themes closely track the areas that tend to draw auditor attention at year-end.
What the staff emphasized
The market participant perspective. Management often starts with borrower-specific information, such as payment history and covenant compliance. The statement reminds registrants that ASC 820 requires adjusting that information when it differs from what a market participant would use, which may include prevailing credit spreads, liquidity conditions, and the compensation a market participant would require for the risks involved. The staff also notes that a lack of timely information from a borrower does not relieve management of its responsibility to estimate fair value.
Calibration. Where valuations rely on unobservable inputs, models are to be calibrated to the transaction price at initial recognition. The staff identifies periodic reassessment against comparable transactions, public market equivalents, secondary market indications, and credit indices as an important element of a well-functioning valuation process.
Disclosure. Level 3 disclosures are expected to describe the valuation techniques used, the significant inputs, and how changes in those inputs could produce a significantly different fair value. The staff cautions that boilerplate or overly aggregated disclosure may not give investors sufficient context. It also points to non-accrual status and payment-in-kind interest as areas where clear disclosure may be material.
NAV as a practical expedient. For investments in other funds, the statement reminds registrants that using an investee’s reported NAV may produce a measurement that differs from the fair value realized in a market transaction. Use of the expedient is optional on an investment-by-investment basis, and management remains responsible for concluding the criteria are met. As secondary market activity grows, the staff expects registrants to consider reasonably available information, including secondary market data, and to document the basis for their conclusions.
Audit evidence. The statement asks auditors to exercise professional skepticism, to weigh evidence that contradicts management’s assertions as well as evidence that supports them, and not to accept evidence that is less than persuasive.
What this means for year-end
For fund finance teams, the practical question is whether the support behind each Level 3 mark is assembled and documented before fieldwork begins. Several areas merit attention in the weeks ahead:
- Calibration from entry price through the current mark, with changes explained by company performance or market movement
- Discount rates, credit spreads, and multiples that reflect conditions at 12/31 rather than at the prior measurement date
- Positions carried at NAV where secondary market pricing for comparable interests may now be available
- Disclosures that describe the specific techniques and inputs used rather than generic language
- Documentation that anticipates the evidence auditors will request, including evidence that may cut against the mark
Independent valuation analysis can support this work where positions are complex, material, or subject to significant judgment.
Houlihan Capital’s Year-End Valuation Review: Where Auditors Focus outlines the judgment areas that most often draw questions at year-end, including calibration, complex capital structures, market inputs, and documentation.
Houlihan Capital provides independent valuations of illiquid and hard-to-value holdings for fund managers, administrators, and their advisors. To discuss year-end valuation planning, contact our team at info@houlihancapital.com or 312.450.8600.
This content is for informational purposes only and does not constitute accounting, legal, or investment advice.
Sources
U.S. Securities and Exchange Commission, Kurt Hohl and Brian Daly, Statement on Fair Value Measurement and Disclosure Considerations for Private Assets, September 28, 2026.
