FASB VOTES TO PROCEED WITH FINAL STANDARD ON HEDGING
Final
Accounting Standards Update to be published August 2017
Effective for public
companies in 2019 and private companies in 2020, with early adoption
permitted
Norwalk, CT, June 7, 2017—The Financial
Accounting Standards Board (FASB) today voted
to proceed with a new accounting standard expected to improve and simplify
accounting rules around hedge
accounting. The final Accounting Standards Update (ASU) is expected to be
published in August 2017.
“Over the past year, the FASB has received
overwhelmingly positive feedback on the proposed changes to the hedge accounting
model from both companies and investors,” noted FASB Chairman Russell
G. Golden. “The resulting standard will better align the accounting rules
with a company’s risk management activities, better reflect the economic results
of hedging in the financial statements, and simplify hedge accounting
treatment.”
Under the new standard, hedge accounting would be refined and
expanded for both financial (e.g., interest rate) and commodity risks. The
economic results would be presented in a more transparent way, both on the face
of the financial statements and in the footnotes, for investors and
analysts.
In September 2016, the 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 the Private
Company Council to discuss private company hedge documentation issues.
The new standard will take effect for fiscal years, and interim periods within
those fiscal years, beginning after December 15, 2018, for public companies and
for fiscal years beginning after December 15, 2019 (and interim periods for
fiscal years beginning after December 15, 2020), for private companies. Early
adoption will be permitted in any interim period or fiscal years before the
effective date of the standard.
About the Financial
Accounting Standards Board
Established in 1973, the FASB is the
independent, private-sector, not-for-profit organization based in Norwalk,
Connecticut, that establishes financial accounting and reporting standards for
public and private companies and not-for-profit organizations that follow
Generally Accepted Accounting Principles (GAAP). The FASB is recognized by the
Securities and Exchange Commission as the designated accounting standard setter
for public companies. FASB standards are recognized as authoritative by many
other organizations, including state Boards of Accountancy and the American
Institute of CPAs (AICPA). The FASB develops and issues financial accounting
standards through a transparent and inclusive process intended to promote
financial reporting that provides useful information to investors and others who
use financial reports. The Financial Accounting Foundation (FAF) supports and
oversees the FASB. For more information, visit http://www.fasb.org/.