FASB Approves Hedge Accounting Standard

June 14, 2017

The Financial Accounting Standards Board (“FASB”) will move forward with a new accounting standard to simplify hedge accounting guidance. Voted on last Wednesday, the standard will refine and expand hedge accounting for financial and commodity risks. In addition, the standard will help investors and analysts by improving transparency to the presentation of economic results in financial statements.

Speaking on the new guidance, FASB Chairman Russell Golden said the standard will enhance the alignment of accounting rules with an entity’s risk management activities and simplify hedge accounting.

The final Accounting Standards Update is scheduled for an August release. For public companies, the upcoming standard on hedge accounting will be effective for fiscal years, and interim periods within such years, starting after December 15, 2018. Private companies must implement the new guidance for fiscal years starting after December 15, 2019, and interim periods for fiscal years starting after December 15, 2020. Early adoption will be encouraged.