NEWS RELEASE 11/26/12
FASB Issues Proposal to Clarify Scope of Disclosures That Apply to
November 26, 2012—The Financial Accounting Standards Board (FASB) today
issued for public comment a proposed
Accounting Standards Update—Balance Sheet (Topic 210): Clarifying the
Scope of Disclosures about Offsetting Assets and Liabilities—that would
clarify the scope of transactions that are subject to the disclosures about
offsetting. Stakeholders are asked to review and provide comment on the proposal
by December 21, 2012.
Balance Sheet Offsetting of Assets and Liabilities
"This proposed Update addresses questions
surrounding the scope of balance sheet offsetting guidance issued last year by
the FASB," said FASB Technical Director Susan M. Cosper. "The goal is to reduce
unintended costs while providing investors and other users with the information
they need to understand the extent to which certain financial instruments are
offset pursuant to master netting arrangements."
The Board's proposed
Update would clarify the scope of Accounting Standards Update No. 2011-11,
Balance Sheet (Topic 210): Disclosures about Offsetting Assets and
Liabilities. Specifically, Update 2011-11 would apply to derivatives,
repurchase agreements and reverse purchase agreements, and securities borrowing
and securities lending transactions that are either offset in accordance with
specific criteria contained in FASB Accounting Standards Codification®
or subject to a master netting arrangement or similar agreement.
last December, Update 2011-11 was the result of a joint project with the
International Accounting Standards Board. Its objective was to improve
transparency and comparability between U.S. GAAP and International Financial
Reporting Standards by requiring enhanced disclosures about financial
instruments and derivative instruments that are either (1) offset on the
statement of financial position or (2) subject to an enforceable master netting
arrangement or similar agreement.
The Board undertook this clarification
project in response to concerns expressed by U.S. stakeholders about the
standard's broad definition of financial instruments. After the standard was
finalized, companies realized that many contracts have standard commercial
provisions that would equate to a master netting arrangement, significantly
increasing the cost of compliance at minimal value to financial statement
Stakeholders are encouraged to review and provide comment on the
Update by December 21, 2012. More information is available about this and
other FASB projects at http://www.fasb.org.