FASB News

Private Companies to See Easier Hedge Accounting Rules Under Proposal.

Private companies will reap significant benefits from a forthcoming FASB proposal that will simplify hedge accounting rules in five areas, according to recent Private Company Council discussions. Three areas—related to component hedging, similar risk assessment, and “choose your rate” debt strategies—will be especially meaningful, giving companies greater flexibility and precision in managing their financial risks, leading to more effective cash flow management and improved financial performance. “Those three issues all seem to be the sorts of things that private companies would care about so it sounds great,” PCC Chair Jere Shawver said on June 24. The discussion comes as FASB wants to reduce the complexity of hedge accounting rules, including provisions that were developed about seven years ago, which raised a series of questions. A proposal will be issued in the third quarter this year to solicit public comment. The proposal will likely be well-received by privately held firms, PCC members said. “I think you’re just making hedge accounting easier and simplifying it and this is all optional anyways, so I can’t imagine private companies being upset by making these things clearer and easier to apply,” said Michael Cheng, national professional practice partner for Frazier & Deeter LLC.

IASB News

World Bank Affiliate and Global Sustainability Standards Setter Join Forces on ESG Reporting

The International Finance Corporation (IFC) and the IFRS Foundation have announced a partnership aimed at improving sustainability and climate reporting in emerging markets and developing economies. The partnership, announced during London’s Climate Action Week, brings together the IFC, a member of the World Bank Group, and the IFRS Foundation, the global standards-setter for sustainability reporting. The collaboration will drive progress in enhancing the quality and consistency of financial disclosures related to environmental, social, and governance (ESG) issues, the groups said on June 27. The IFRS Foundation’s International Sustainability Standards Board (ISSB) issued two inaugural standards in June 2023 that aim to deliver consistency and comparability of sustainability-related financial disclosures for global capital markets. To date, jurisdictions making up around 55% of global gross domestic product are already taking steps towards using these standards. Under the partnership, the IFC and IFRS Foundation will work together to implement programs that promote and build capacity for the consistent application of the IFRS Sustainability Disclosure Standards across emerging markets and developing economies. This includes developing toolkits and research publications, as well as conducting training programs to encourage sustainability reporting. “We are proud to collaborate with IFC, uniting our commitment to high-quality sustainability and climate-related financial reporting with their deep market insights and global reach,” ISSB Vice Chair Jingdong Hua said in a statement. “This partnership will expand our impact, helping enhance the quality of sustainability and climate-related financial reporting worldwide, especially in emerging markets and developing economies.”

IFRS Foundation Taps Former Trustee Michel Madelain to Drive Strategic Plan

The IFRS Foundation, the organization responsible for developing and promoting international financial reporting standards, has appointed Michel Madelain as its new Managing Director, effective September 9. Madelain will lead the implementation of the IFRS Foundation’s strategic plan. He brings extensive experience to the role, having served as President and Chief Operating Officer of Moody’s Investors Service and as a partner at EY France. Notably, Madelain served as a Foundation Trustee from 2018 to 2023, where he chaired the Nominating Committee, was instrumental in establishing the International Sustainability Standards Board (ISSB) alongside the International Accounting Standards Board (IASB), and led the consolidation of the Climate Disclosure Standards Board and the Value Reporting Foundation into the Foundation. “I’m pleased to be returning to the IFRS Foundation in this new capacity and look forward to working closely with the trustees, IASB, and ISSB to drive the implementation of the strategic plan,” Madelain said in a statement. As managing director, Madelain will report to the chair of the trustees and will be responsible for leading the central team. His top priorities will include delivering on the efficiency and effectiveness of the “one foundation, two boards” operating model, evolving the long-term strategy and funding arrangements of the foundation, and working closely with the leadership of the International Accounting Standards Board (IASB) and ISSB.