New Hedge Accounting Standards from the FASB to Take Effect Next Year

The Financial Accounting Standards Board (FASB) recently issued a final Accounting Standards Update (ASU) that it says will improve and simplify accounting rules related to hedge accounting.

The new ASU is effective for public companies in 2019 and private companies in 2020, the FASB said in a press release. Early adoption is permitted. The new standard takes effect for fiscal years and interim periods within those fiscal years, after Dec. 15, 2018, for public companies. For private companies, the standards take effect for fiscal years after Dec. 15, 2019.

“Companies and investors alike have expressed overwhelming support for this long-awaited standard,” stated FASB Chairman Russell G. Golden. “Thanks to their input, the final ASU better aligns the accounting rules with a company’s risk management activities, better reflects the economic results of hedging in the financial statements and simplifies hedge accounting treatment.”
The new standard refines and expands hedge accounting for financial (interest rate) and commodity risks, and it provides more transparency around how economic results are presented, both on the face of financial statements and in the footnotes, the FASB said.

The FASB will host a free, one-hour webinar entitled IN FOCUS: FASB Accounting Standards Update on Hedging from 1 p.m. to 2 p.m., Eastern, on Sept. 25. More on the webinar can be found here.

– Nicholas Stern, Managing Editor

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