FASB published an Exposure Draft on the Accounting Standard Update on derivatives and hedging (Topic 815), along with the proposed Generally Accepted Accounting Principles (GAAP) taxonomy improvements for the Accounting Standards Update on Topic 815. The amendments in this update relate to accounting for fair value hedge basis adjustments under the portfolio layer method. FASB also published an Excel document presenting the proposed taxonomy improvements. The comment period for the Exposure Draft on Topic 815 ends on July 05, 2021. Additionally, as per the published notification, the comment period on the proposed taxonomy improvements also ends on July 05, 2021.
The amendments in this proposed update would clarify the accounting for, and promote consistency in the reporting of, fair value hedge basis adjustments applicable to both the current single-layer model and the proposed multiple-layer model. The amendments would allow multiple-layer hedging relationships to be designated for a single closed portfolio of prepayable financial assets or one or more beneficial interests secured by a portfolio of prepayable financial instruments. Thus, an entity would be able to achieve hedge accounting for hedges of a greater proportion of the interest rate risk inherent in the assets included in closed the portfolio, further aligning hedge accounting with risk management strategies. The amendments in this proposed update would apply to all entities that elect to apply the portfolio layer method (also known as the last-of-layer method) of hedge accounting in accordance with Topic 815. The effective date will be determined after the Board considers stakeholder feedback on the amendments in this proposed update. Any entity wishing to adopt a multiple-layer hedge strategy would be able to do so on a prospective basis upon adoption. The proposed GAAP taxonomy improvements will be required upon finalization of the proposed Accounting Standards Update on Topic 815.
- Proposed Standard (PDF)
- Notification on Taxonomy Improvements (PDF)
- Release Notes on Taxonomy Improvements (PDF)
- Proposed Taxonomy Improvements (XLSX)
- GAAP Taxonomy Improvements
Comment Due Date: July 05, 2021
Keywords: Americas, US, Banking, Accounting, Accounting Standards Update, Topic 815, GAAP, Derivatives and Hedging, Taxonomy, IFRS Equivalent, IFRS 9, Portfolio Layer Method, FASB
Previous ArticleDanish Central Bank to Continue Cyber Testing With TIBER-DK Program
The three European Supervisory Authorities (ESAs) issued a letter to inform about delay in the Sustainable Finance Disclosure Regulation (SFDR) mandate, along with a Call for Evidence on greenwashing practices.
The International Sustainability Standards Board (ISSB) of the IFRS Foundations made several announcements at COP27 and with respect to its work on the sustainability standards.
The International Organization for Securities Commissions (IOSCO), at COP27, outlined the regulatory priorities for sustainability disclosures, mitigation of greenwashing, and promotion of integrity in carbon markets.
The European Banking Authority (EBA) issued a statement in the context of COP27, clarified the operationalization of intermediate EU parent undertakings (IPUs) of third-country groups
The Office of the Superintendent of Financial Institutions (OSFI) published an annual report on its activities, a report on forward-looking work.
The Australian Prudential Regulation Authority (APRA) finalized amendments to the capital framework, announced a review of the prudential framework for groups.
The Bank for International Settlements (BIS) Innovation Hubs and several central banks are working together on various central bank digital currency (CBDC) pilots.
The European Central Bank (ECB) published the results of its thematic review, which shows that banks are still far from adequately managing climate and environmental risks.
Among its recent publications, the European Banking Authority (EBA) published the final standards and guidelines on interest rate risk arising from non-trading book activities (IRRBB)
The European Commission (EC) recently adopted regulations with respect to the calculation of own funds requirements for market risk, the prudential treatment of global systemically important institutions (G-SIIs)