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FASB Publishes Article on Coming Exposure Draft

A new article published by FASB, “What You Need to Know About Hedging,” examines some of the thought behind the highly anticipated Exposure Draft dealing with hedge accounting.

According to FASB, the proposed guidance aims to simplify hedge accounting for the benefit of both financial statement preparers and users. The drafted proposal, the article reads, “is intended to more closely align hedge accounting with a company’s risk management strategy and more clearly present the effect of hedge accounting on the financial statements.” The brief article doesn’t go into detail; however it appears that the proposal will:

  • Ease restrictions on what qualifies for hedge accounting
  • Eliminate measurement and recording of hedge ineffectiveness
  • Establish qualitative effectiveness testing after an initial quantitative test
  • Allow for additional time to prepare the initial quantitative test
  • Add additional disclosures to provide users with a more complete overview of how hedge accounting has impacted the income statement and balance sheet

The article indicates that the Exposure Draft is expected to be issued in mid-2016. To see the complete article, visit http://www.fasb.org/jsp/FASB/Page/SectionPage&cid=1176168083602. To see our regular FASB Updates, keep checking hedgetrackers.com/blog.