NEWS RELEASE 02/09/11
FASB Discussion Paper Seeks Input on Issues about Hedge AccountingNorwalk, CT, February 9, 2011—The Financial Accounting Standards Board (FASB) today issued a Discussion Paper to solicit input on how to improve, simplify, and converge the financial reporting requirements for hedging activities.
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.
“The FASB is issuing this Discussion Paper to determine whether our constituents think the IASB’s proposed changes would improve the accounting for hedging activities,” stated FASB Chairman Leslie F. Seidman. “The information received during the comment period will be helpful to both the FASB and the IASB as we deliberate issues pertaining to hedge accounting.”
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.
The Discussion Paper is available at www.fasb.org. Written comments on the documents should be submitted by April 25, 2011.
About the Financial Accounting Standards Board
Since 1973, the Financial Accounting Standards Board has been the designated organization in the private sector for establishing standards of financial accounting and reporting. Those standards govern the preparation of financial reports and are officially recognized as authoritative by the Securities and Exchange Commission and the American Institute of Certified Public Accountants. Such standards are essential to the efficient functioning of the economy because investors, creditors, auditors, and others rely on credible, transparent, and comparable financial information. For more information about the FASB, visit our website at www.fasb.org.