FASB issues improvements to hedge accounting

Written on Sep 08, 2017

FASB has issued a final Accounting Standards Update (ASU) that will improve and simplify accounting rules around hedge accounting. The ASU is effective for public companies in 2019 and private companies in 2020. Early adoption is permitted.

The new standard refines and expands hedge accounting for both financial (e.g., interest rate) and commodity risks. Its provisions create more transparency around how economic results are presented, both on the face of the financial statements and in the footnotes, for investors and analysts.

In September 2016, FASB issued an Exposure Draft that generated 60 comment letters. Additionally, the FASB engaged in extensive stakeholder outreach, including numerous discussions with investors and other financial statement users; two public roundtables, which included preparers, auditors, regulators, and other stakeholders; and meetings with advisory groups (FASAC, IAC, NAC, PCC).

The new standard takes effect for fiscal years, and interim periods within those fiscal years, beginning after Dec. 15, 2018, for public companies and for fiscal years beginning after Dec. 15, 2019 (and interim periods for fiscal years beginning after Dec. 15, 2020), for private companies. Early adoption is permitted in any interim period or fiscal years before the effective date of the standard.

On Sept. 25, 2017, FASB will host a one-hour webinar, IN FOCUS: FASB Accounting Standards Update on Hedging, from 1pm – 2pm ET. Offered free of charge to those who preregister, the webinar will feature FASB Vice Chairman James L. Kroeker, FASB Member R. Harold Schroeder, and members of the FASB project team discussing key aspects of the new standard. Viewers of the live webcast will be eligible to receive up to 1.2 continuing professional education (CPE) credits. Registration and other information is available on the FASB website.

The final ASU, a FASB in Focus overview, an educational video, and an Understanding Costs and Benefits document are available at www.fasb.org.

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