Technical Corrections for Hedge Accounting Standard Put on Hold
At its February 14 meeting, FASB backed away from issuing a limited, technical correction for its August 2017 amendments to hedge accounting. Instead, the board wants its staff to study how the word “prepayable” is used in the hedge standard’s guidance for the shortcut method of hedge accounting before it determines whether a technical correction is needed. The discussion was part of the board’s review of the progress on implementing the guidance from Accounting Standards Update (ASU) 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. Most of the questions on the standard have been technical and did not rise to a level that required FASB’s attention, but the staff wanted the board to approve its answers “because they’re interpretive in nature, and they aren’t necessarily written in the guidance,” FASB supervising project manager Jeff Gabello said.
Updates on Standards Setting Initiatives Expected at Next Quarterly FAF Meeting
The parent organization of FASB and GASB has scheduled its next quarterly trustees meeting for May 23. The panel is slated to hear reports from the heads of the two standards setting bodies and updates from Financial Accounting Foundation (FAF) President and CEO Teresa Polley and FAF Chairman Charles Noski. The meeting agenda also includes a report from FAF Chairman Charles Noski and an update from the Standards Setting Process Oversight Committee. Significant announcements, such as the appointment of new members to the accounting boards, also are sometimes revealed at the FAF’s quarterly meetings. In November, the FAF announced that Gary Buesser, a Lazard Asset Management LLC director and research analyst, will join FASB in July 2018 and that FASB Vice Chairman James Kroeker was reappointed to a second five-year term on the board.
More Consistency Sought for Segment Reporting Guidance
Segment reporting is a source of frustration for investors and analysts, who complain that companies lump together too many business units to give good insight into their performance. FASB wants to improve the criteria used to determine when to aggregate this data, but is proceeding slowly and wants to perform extended research before making any changes. Instead, the board is intent on sticking with the existing standard’s requirement to tie the information for reporting segments based on the person or group of people described in the standard’s disclosure requirements and implementation guidance as the chief operating decision maker (CODM). Other aspects of the standard, including the criteria used to aggregate or compile information and disclosures about segments, are being reviewed. “Broadly speaking, what we’re trying to do is say, ‘Look, the CODM model works,’” FASB Chairman Russell Golden said at the end of the meeting. “What doesn’t seem to work is the judgment associated with the aggregation criteria.”
