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FASB Advances Project to Simplify Hedge Accounting

Progress continues on the Financial Accounting Standards Board’s (“FASB”) attempts to simplify hedge accounting. At last week’s meeting, the FASB affirmed the more popular amendments under Proposed Accounting Standards Update (ASU) No. 2016-310, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. Amendments that were agreed upon include allowing the use of hedge accounting for certain parts of nonfinancial items. The FASB will add Securities Industry and Financial Markets Association Municipal Swap Rate as an acceptable benchmark interest rate for hedges of fixed-interest-rate items. The Board also agreed to provide relief from the penalty created by an. Read More.

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Private Company Council, FASB Members Meet to Discuss Projects

Private Company Council (“PCC”) members gathered Tuesday to discuss the Financial Accounting Standards Board’s (“FASB”) ongoing projects. With FASB staff members also on hand to provide updates, the PCC provided feedback on the following matters: Financial instruments—hedge accounting. During talks on the FASB’s effort to simplify hedge accounting, the PCC asked the FASB to make a decision on whether to offer an exception for private companies when fulfilling their hedge documentation and effectiveness testing requirements. Consolidation reorganization and improvements. Several PCC members still want private companies under common control to be exempt from the variable interest entity guidance under Topic. Read More.

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Roundtables Planned for FASB Hedge Accounting Proposal

Two roundtable sessions are scheduled for Friday, December 2, regarding the Financial Accounting Standards Board’s (“FASB”) proposed Accounting Standards Update, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. Hosted at the FASB offices in Norwalk, Connecticut, the roundtables will allow stakeholders who submitted a comment letter to discuss their feedback on the proposal. The roundtable sessions are scheduled as follows: Session 1: 9:00 a.m. – 12:00 p.m. ET Session 2: 1:00 p.m. – 4:00 p.m. ET Registration to participate in one of the roundtables is available at FASB.org. The deadline to register and submit a comment letter is Friday, November 4. Nonparticipating observers must register to attend by. Read More.

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Changes Proposed to Hedge Accounting Guidance

An Exposure Draft has been issued to improve the guidance in relation to hedging activities. The proposed Accounting Standards Update (“ASU”), Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, includes the Financial Accounting Standards Board’s (“FASB”) recommendations to help entities disclose the economic results of their risk management activities. The proposed changes also aim to simplify hedge accounting guidance while maintaining the value of the financial reporting information presented. Comments on the proposal are due Tuesday, November 22. More on the proposed changes to hedge accounting guidance is available in the FASB news release.

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Hedge Accounting Proposal Coming Later This Summer

On June 9, the Financial Accounting Standards Board (“FASB”) announced that proposed updates to its hedge accounting guidance will be released in either August or September. FASB research staffers plan to submit the proposal’s latest version at a meeting in July reflecting changes offered during the “fatal flaw” review. Such reviews are commonly held prior to the FASB release of a key proposed or final update. FASB Technical Director Susan Cosper does not expect staff members to present new issues during next month’s meeting, but rather suggest the FASB to revisit the transaction guidance.

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FASB Clarifies Guidance for Derivative Instrument Accounting

Accounting Standards Update (ASU) No. 2016-05, Derivatives and Hedging (Topic 815): Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships, has been issued by the Financial Accounting Standards Board (“FASB”). The amendments clarify the guidance in Topic 815. Specifically, ASU No. 2016-05 clarifies that a change in the counterparty to a derivative instrument designated as the hedging instrument does not require dedesignation of the hedging relationship so long as all other hedge accounting criteria. The amendments in ASU No. 2016-05 are effective for public companies’ financial statements issued for fiscal years, and interim periods within those years, starting after December. Read More.

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