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11 February 2011

FASB calls for improvement of hedge accounting


The FASB issued a Discussion Paper to solicit input on how to improve, simplify, and converge the financial reporting requirements for hedging activities. Written comments on the documents should be submitted by April 25, 2011.

In May 2010, the FASB proposed its revisions to improve and simplify standards for financial reporting of financial instruments, including hedge accounting guidance, in its proposed Accounting Standards Update (Update), Accounting for Financial Instruments and Revisions to the Accounting for Derivative Instruments and Hedging Activities—Financial Instruments (Topic 825) and Derivatives and Hedging (Topic 815). In December 2010, as part of its project to improve the accounting for financial instruments, the IASB issued its Exposure Draft (ED), Hedge Accounting, which seeks to align hedge accounting more closely with risk management while addressing inconsistencies and weaknesses in the existing hedge accounting model.

Differences exist between IFRS and U.S. GAAP relating to hedge accounting. The revisions proposed by the IASB in its ED would result in more differences compared with the FASB’s current and proposed hedge accounting guidance. The FASB Discussion Paper asks stakeholders whether the IASB’s proposals are a better starting point for any changes to U.S. GAAP as it relates to derivatives and hedging activities.

  In addition to soliciting written comments on the FASB’s Discussion Paper, the FASB plans to participate in the IASB’s discussion of comments received on its ED, as well as input received on the FASB proposed update in the second quarter of 2011.

Press release


© FASB

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