FASB ISSUES IMPROVEMENTS TO HEDGE ACCOUNTING
Effective
for public companies in 2019 and private companies in 2020, with early adoption
permitted
Norwalk, CT, August 28, 2017—The
Financial Accounting Standards Board (FASB)
today issued a final Accounting Standards Update (ASU)
that will improve and simplify accounting rules around hedge accounting. The ASU
is effective for public companies in 2019 and private companies in 2020. Early
adoption is permitted.
"Companies and investors alike have expressed
overwhelming support for this long-awaited standard," stated FASB Chairman Russell
G. Golden. "Thanks to their input, the final ASU better aligns the
accounting rules with a company's risk management activities, better reflects
the economic results of hedging in the financial statements, and simplifies
hedge accounting treatment."
The new standard refines and expands hedge
accounting for both financial (e.g., interest rate) and commodity risks. Its
provisions create more transparency around how economic results are presented,
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 advisory
groups (FASAC,
IAC,
NAC,
PCC).
The new standard takes 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
is permitted in any interim period or fiscal years before the effective date of
the standard.
On Monday, September 25, 2017, the FASB will host a
one-hour webinar, IN FOCUS: FASB Accounting Standards Update on
Hedging, from 1:00 to 2:00 p.m. Eastern Daylight Time. Offered free of
charge to those who preregister, the webinar will feature FASB Vice Chairman James
L. Kroeker, FASB Member R.
Harold Schroeder, and members of the FASB project team discussing key
aspects of the new standard. Viewers of the live webcast will be eligible to
receive up to 1.2 continuing professional education (CPE) credits. Registration
and other information is available on the FASB website.
The final ASU,
a FASB in Focus overview, an educational video, and an Understanding Costs and Benefits document are
available at http://www.fasb.org/.
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/.