Defining Issues | September 2016

FASB proposes targeted changes to hedge accounting

KPMG reports on proposed amendments to ASC 815. The FASB’s proposals could reduce the cost and effort required to apply hedge accounting and expand the type of activities that qualify for hedge accounting.


Proposed ASU on ASC Topic 815

  • Company with derivative instruments that does not currently qualify for hedge accounting
  • Company that currently applies or will apply hedge accounting

Relevant dates

  • September 8, 2016 – FASB issued exposure draft
  • November 22, 2016 – Comment deadlines

Key impacts

The proposed ASU would:

  • Expand the types of hedging activities that could qualify for hedge accounting to provide additional opportunities to align hedge accounting with an entity’s existing risk management activities
  • Reduce the cost and complexity of monitoring the effectiveness of hedge relationships and implementing hedge accounting


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Report contents

  • Risk component hedging
  • Changes to recognition and presentation
  • Reduced cost and complexity for preparers
  • Proposed transition and effective date



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