The Financial Accounting Standards Board (FASB) has released the proposed Accounting Standards Update (ASU), Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, which was initially issued in 2017 in ASU No. 2017-12.
The proposed ASU would:
- further define certain aspects of the guidance on hedge accounting
- address several incremental hedge accounting issues arising from the global reference rate reform initiative
- present clearly and accurately the economic results of an entity’s risk management activities in its financial statements
- implement certain targeted improvements to simplify the application of the hedge accounting guidance
In response to FASB’s 2021 agenda consultation project and other outreach efforts, stakeholders shared concerns that, in some cases, the current guidance hinders the ability to apply hedge accounting for otherwise highly effective hedging relationships, providing investors with less information with which to make decisions. Stakeholders also noted some areas of hedge accounting guidance that require further updates to address the impact of reference rate reform on hedge accounting. Under the proposed ASU, entities would be able to apply hedge accounting to a greater number of highly effective economic hedges, which would enhance the decision-usefulness of information that is provided to investors.
The proposed ASU and other FASB resources are available at www.fasb.org. Interested parties are encouraged to review the proposed ASU and submit comments via email to xbrled@fasb.org by November 25, 2024.
Sources:
FASB Seeks Public Comment on Proposed Improvements to Hedge Accounting (fasb.org)
Proposed Accounting Standards Update (fasb.org)
