FASB Proposes Accounting Standards Update on Codification Improvements
FASB published an Exposure Draft that proposed an Accounting Standards Update on codification improvements, which include codification updates for technical corrections, clarifications, and other minor improvements. Comments are due by December 04, 2017. The “Amendments to the FASB Accounting Standards Codification” section explains the reason for each proposed amendment in this Update and contains a chart identifying the Topics, paragraphs, and the nature of amendments being proposed. The amendments in this proposed Update would affect a wide variety of Topics in the Codification, including Amendments to Subtopic 815-10 on Derivatives and Hedging and Amendments to Subtopic 820-10 on Fair Value Measurement.
Amendments to Subtopic 815-10, Derivatives and Hedging. The amendments in this proposed update would clarify the circumstances in which derivatives may be offset. Under certain conditions, derivatives may be offset if three of the four criteria in paragraph 210-20-45-1 are met. One of the criteria—the intent to set off—may not be required to offset derivative assets and liabilities for certain amounts arising from derivative instruments recognized at fair value and executed with the same counterparty under a master netting agreement. The guidance in paragraph 815- 10-45-4 is potentially misleading because it specifically references the criteria in paragraph 210-20-45-1, which states that derivatives may only be offset when all four of the conditions in paragraph 210-20-45-1 are met. The proposed amendments would (1) modify the reference in paragraph 815-10-45-4 so that the reader is directed to the full guidance of Subtopic 210-20, Balance Sheet— Offsetting, and (2) clarify the guidance in paragraph 815-10-45-5 for the exception of the intent to set off criteria for derivatives.
Amendments to Subtopic 820-10 on Fair Value Measurement. The amendments in this proposed update would clarify the Board’s decisions about the measurement of the fair value of a liability or instrument classified in a reporting entity’s shareholder’s equity from the perspective of a market participant that holds an item identical to an asset at the measurement date. The amendments in this proposed update would also revise the current guidance to allow portfolios of financial instruments and nonfinancial instruments accounted for as derivatives in accordance with Topic 815 to use the portfolio exception to valuation. Additionally, the amendment to paragraph 820-10-50-2(bbb)(2) in this proposed update would replace indefinite deferral guidance that is currently in paragraph 820-10-65-9 with a disclosure exemption in paragraph 820-10-50-2(bbb)(2) and paragraphs that explicitly cite that paragraph. The proposed amendments are not intended to substantively change the application of generally accepted accounting principles or GAAP. However, it is possible that the proposed amendments may result in a change to the existing practice for some entities.
The provisions of this Exposure Draft, if finalized as proposed, would require changes to the U.S. GAAP Financial Reporting Taxonomy (Taxonomy). After the FASB has completed its deliberations and issued a final Accounting Standards Update, the proposed amendments to the Taxonomy will be made available for public comment and finalized as part of the annual release process.
Related Link: Exposure Draft on Codification Improvements (PDF)
Comment Due Date: December 04, 2017
Keywords: Americas, US, Banking, Securities, Insurance, Accounting, Derivatives and Hedging, Codification Improvements, Fair Value Measurement, Taxonomy, FASB
Previous Article
EBA Published Draft Amending Technical Standards on CVA Proxy SpreadRelated Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.
