Last updated on June 27, 2019. Please refer to the Current Technical Plan for information about the expected release dates of exposure documents and final standards.
(Sections updated on the date above are indicated with an asterisk *)
Project Objective and Background
Objective:The objective of this project is to facilitate the effects on financial reporting of the market-wide migration from interbank offered rates (IBORs) to alternative reference rates.
The London Interbank Offered Rate (LIBOR) is the most commonly used reference rate in the global financial market. However, concerns about the sustainability of LIBOR and other IBORs globally has led to an effort to identify alternative reference rates. In the United States, the Alternative Reference Rates Committee convened by the Federal Reserve identified the Secured Overnight Financing Rate as its preferred alternative reference rate to U.S. dollar LIBOR.In October 2018, the Board issued Accounting Standards Update No. 2018-16, Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes.
Concurrent with the issuance of Update 2018-16, the Board decided to add to its agenda this project to broadly consider changes to generally accepted accounting principles (GAAP) necessitated by reference rate reform, which includes (but is not limited to) the modification of existing hedging relationships and of debt and other financial instruments.
Exposure Draft(s):There are no exposure documents at this time.
Read the press release on the tentative Board decisions reached at the June 19th Board meeting.
Media Releases and Educational Materials*
Decisions Reached at Last Meeting (June 19, 2019):
At the June 19, 2019 Board meeting, the Board discussed the following topics:
- The scope criteria for determining whether a contract modification may qualify for relief.
- The recognition and measurement relief for contract modifications that meet the scope criteria.
- Whether the application of the relief should be mandatory or optional on a Codification Topic-by-Topic basis.
The Board decided on the following principles for the cope criteria:
- Contracts that reference the London Interbank Offered Rate or an interest rate that has been discontinued or is anticipated to be discontinued would qualify for the relief guidance.
- Critical term changes that are either essential to or related to the replacement of an interest rate would qualify for the relief guidance. The Board also decided to provide examples of eligible and ineligible changes.
The Board decided to provide relief from the following:
- The assessment to determine whether a modification to a loan or debt instrument is a troubled debt restructuring, modification, or extinguishment in accordance with Subtopics 310-20, Receivables—Nonrefundable Fees and Other Costs, 310-40, Receivables—Troubled Debt Restructurings by Creditors, 470-50, Debt—Modifications and Extinguishments, and 470-60, Debt—Troubled Debt Restructurings by Debtors.
- The lease modification accounting requirements in accordance with Topic 842, Leases.
- The reassessment of embedded derivatives in accordance with Topic 815, Derivatives and Hedging.
Option to Apply Relief
The Board decided to provide an option for an entity to determine whether it wants to apply the relief on a Codification Topic-by-Topic basis.
The Board will discuss the following topics at a future meeting:
- Hedge accounting relief
- Relief period
The Board meeting minutes, handouts, and videos 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.
Board Meeting Materials and Information*
The following are links to the minutes for each meeting. To view Board meetings and handouts from the past 90 days, click here.
|June 19, 2019*||Board Meeting—Discussion on the proposed scoping criteria and interbank offered rate (IBOR) contract modification relief.|
|August 29, 2018||Board Meeting—The Board added the Reference Rate Reform project to the technical agenda.|