Home Banking & Finance FASB issues standards update for hedge accounting

FASB issues standards update for hedge accounting

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The Financial Accounting Standards Board (FASB) has issued a final Accounting Standards Update (ASU) designed to improve and simplify hedge accounting rules.

FASB accounting standards russell golden
Russell Golden

According to the Norwalk-based FASB, 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.”

FASB issued an “exposure draft” on the new standard in September 2016 that generated 60 letters of comments, which was followed by stakeholder outreach that included two public roundtables and meetings with financial services industry advisory groups.

“Companies and investors alike have expressed overwhelming support for this long-awaited standard,” FASB Chairman Russell G. Golden said. “Thanks to their input, the final ASU better aligns the accounting rules with a company’s risk management activities, better reflects the economic results of hedging in the financial statements, and simplifies hedge accounting treatment.”

For public companies, the new standard takes effect for fiscal years after Dec. 15, 2018, as well as for the interim periods within those fiscal years. For private companies, the standard takes effect for fiscal years beginning after Dec. 15, 2019, and during interim periods for fiscal years beginning after Dec. 15, 2020.

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