The Accounting Policy & Practice Report ® provides financial accounting policy makers, advisors, and practitioners with the latest news, expert insights, and guidance on emerging, evolving,...
March 24 — Companies will have a choice of methods in how they would shift to planned hedge accounting changes aimed at streamlining complex rules focusing on derivatives used to counter risk of loss, the Financial Accounting Standards Board has decided.
Enterprises would be allowed to use either what is known as a “modified retrospective” transition approach or a method calling for a full retrospective, look-back in applying the future accounting standards update, FASB concluded in a unanimous vote March 23.
In addition, the board voted 5-2 to support “early adoption” of the planned ASU on hedging. Companies would be allowed to apply the new rules at the start of any fiscal period before the yet undecided effective date for the standard.
FASB expects to issue a draft standards update containing the hedge accounting changes sometime mid-year, a board spokesman told Bloomberg BNA March 24. The proposed ASU would then be open for comment.
The amendments to current rules on derivatives and hedging—some of FASB's most complicated standards—are expected to lead to a wider use of the special accounting prescriptions that accompany use of derivatives aimed at reducing risk.
The board also hopes to have the hedge accounting changes lead to a better reflection of companies' risk management practices, as board members and staff accountants have said.
In a key meeting last June 29, FASB made a series of tentative decisions that encompassed both financial instruments and nonfinancial transactions, such as purchases of ingredients and materials for production and operations by non-bank enterprises . The latter activities are known as nonfinancial hedges.
At its March 23 meeting, the board also voted on questions relating to footnote disclosures at transition to the planned ASU, transition elections at date of adoption and additional transition-related issues.
To contact the reporter on this story: Steve Burkholder in Norwalk, Conn., at firstname.lastname@example.org
To contact the editor responsible for this story: Steven Marcy at email@example.com
A detailed board meeting handout on the hedging issues considered March 23 (item 3 of 4) is available at http://src.bna.com/dzP.
A summary of the board's March 23 board decisions is to be posted soon at http://src.bna.com/dzS,
A project update, including minutes of key meetings of June 29, 2015 and Oct. 7, 2015, is available at http://src.bna.com/dzK.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)