Project Update

Accounting for Financial Instruments—Hedge Accounting

Last updated on June 3, 2015. Please refer to the Current Technical Plan for information about the expected release dates of exposure documents and final standards.

(Updated sections are indicated with an asterisk *)

This project update summarizes the project activities and decisions of the IASB and the FASB (Boards). It was prepared by the staff and is for the information and convenience of their constituents. All decisions of the Boards are tentative, may change at future Board meetings, and do not change current accounting and reporting requirements. Decisions of the Boards become final only after extensive due process.

Project Objective and Background
Due Process Documents
IASB Due Process Documents
*Decisions Reached at the Last Meeting
Tentative Board Decisions Reached to Date
*Next Steps
*Board/Other Public Meeting Dates—Current
*Contact Information

Project Objective and Background

This project addresses issues related to hedge accounting for financial instruments and non-financial items. The objective of this project is to make targeted improvements to the hedge accounting model based on the feedback received from preparers, auditors, users and other stakeholders. The Board will consider opportunities to align with IFRS 9 Financial Instruments.

Click here for the project objective and background information on the overall Accounting for Financial Instruments project.

Due Process Documents

On February 9, 2011, the FASB issued a Discussion Paper—Invitation to Comment—Selected Issues about Hedge Accounting to solicit input on the IASB’s Exposure Draft, Hedge Accounting. The comment period ended on April 25, 2011.

On May 26, 2010, the FASB issued one comprehensive proposed Accounting Standards 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). The comment period ended on September 30, 2010.
On June 6, 2008, the FASB issued an Exposure Draft, Accounting for Hedging Activities. The comment period ended on August 15, 2008.

IASB Due Process Documents

In July 2014, the IASB published the final version of IFRS 9 Financial Instruments.

IFRS 9 Financial Instruments

Click here to access the IASB's hedge accounting project page for more information about the IASB’s deliberations.

*Decisions Reached at the Last Meeting

The Board discussed the following issues:
  1. Presentation of hedge ineffectiveness
  2. Disclosures related to cumulative-basis adjustments in fair value hedges
  3. Tabular disclosures about the effect of hedge accounting on statement(s) of financial performance line items
  4. Hedge documentation requirements.
The Board made no technical decisions.

Tentative Board Decisions Reached to Date

The Board began redeliberations on February 25, 2015, but no technical decisions have been made. See the May 2010 proposed Update on financial instruments for all decisions reached to date.

*Next Steps

The Board will continue deliberations on the topics included within the scope of the project in non-decision making meetings. Decision making meetings will be held in July 2015.

*Board/Other Public Meeting Dates—Current

The Board meeting minutes are provided for the information and convenience of constituents who want to follow the Board’s deliberations. All of the conclusions reported are tentative and may be changed at future Board meetings. Decisions become final only after a formal written ballot to issue a final standard.

*May 27, 2015 Board Meeting—Discussions about the presentation of hedge ineffectiveness, disclosures related to cumulative-basis adjustments in fair value hedges, tabular disclosures about the effect of hedge accounting on statement of financial performance line items, and hedge documentation requirements.
*April 22, 2015 Board Meeting—Discussions about selected benchmark interest rate hedging issues, shortcut and critical terms match methods, and the effectiveness threshold for hedges of financial assets and liabilities.
*April 7, 2015 Board Meeting—Discussions about the presentation of hedge ineffectiveness, defining a reasonably effective threshold, fair value hedges of nonfinancial items, disclosures for hedges of nonfinancial items, and qualitative effectiveness testing.
February 25, 2015 Board Meeting—Discussions about the effectiveness threshold and qualitative versus quantitative testing of hedge effectiveness, as well as component hedging for nonfinancial items.
November 5, 2014 Board Meeting—Project added to the technical agenda
September 23, 2014 Board Meeting—Discussions about feedback received on the hedge accounting portion of the Board’s May 2010 proposed Accounting Standards Update. The Board also discussed their preferences regarding the approach in carrying out the hedge accounting project.
January 29, 2014 Board Meeting—Decision to perform research on the scope of the hedge accounting phase of the project
May 2, 2012 Education Session—Discussions about the major themes that emerged through outreach efforts with financial statement users regarding derivatives and hedge accounting.
November 30, 2011 Education Session—Discussions about the IASB’s hedge accounting model, presented by the IASB staff. Click here for the slides used in the IASB’s presentation.
August 24, 2011 Board Meeting—Discussions about the comments received on the Invitation to Comment, Selected Issues about Hedge Accounting
March 16, 2011 Joint Board Meeting—Discussions about the outreach and comment letter summaries on the IASB’s Exposure Draft.
Click here for minutes of public meetings on the accounting for financial instruments project that were held related to the issuance of the May 2010 proposed Update on financial instruments.

*Contact Information

Jeffrey Gabello
Project Manager
jjgabello@fasb.org

Nick Milone
Practice Fellow
nkmilone@fasb.org

Julie Um
Assistant Project Manager
jcum@fasb.org

Rosemarie Sangiuolo
Project Consultant
rsangiuolo@fasb.org

Michael Cahill
Postgraduate Technical Assistant
mpcahill@fasb.org

Jeffrey Bjorkman
Postgraduate Technical Assistant
jpbjorkman@fasb.org