Financial Accounting Standards Board Proposals on Hedge Accounting

Alan PenhallowFinancial Accounting Standards Board Proposals on Hedge Accounting by Alan Penhallow

FASB has decided tentatively to propose a number of targeted amendments to hedge accounting rules for both financial and nonfinancial hedges. The board is developing a draft accounting standards update to amend Topic 815 in the Accounting Standards Codification while the staff also is planning to study the costs, benefits, and complexity of what the board plans to propose. A proposed update to accounting standards is expected by the end of 2015.

According to a PwC alert, FASB’s plan is to propose “targeted amendments” to several areas of existing hedge accounting guidance for both financial and nonfinancial hedges. “The goal is to better align hedge accounting with a reporting entity’s risk management objectives and simplify hedge accounting for preparers,” the firm says. “The changes, if finalized, will significantly change what qualifies for hedge accounting, how it is documented, how hedge effectiveness is assessed and hedge ineffectiveness is measured, and how the hedging results are presented and disclosed in the financial statements.”

https://www.complianceweek.com/blogs/accounting-auditing-update/fasb-nears-proposal-on-hedge-accounting#.Va35qaRVhBc