FASB Indicates It Might Be Ready To Ease Hedging Documentation Rules

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May 27 — A majority of the Financial Accounting Standards Board appears inclined to ease what can be detailed requirements for companies to document hedging set-ups, which generally hinge on the use of derivatives.

At a May 27 board meeting, four members of FASB suggested they would favor changing hedge documentation prescriptions in the board's hedge accounting rules, Accounting Standards Codification 815, Derivatives and Hedging.

More specifically, a majority of the seven-member board spoke in favor of allowing some leeway in timing for a required completion of “the initial quantitative prospective assessment.” In that assessment, a hedging instrument—typically a derivative—would be gauged for how effective it would be in countering changes in prices or values of an item being hedged.