FASB Issues Statement Requiring Disclosures About Derivatives and Hedging
March 24, 2008
On March 19, 2008, the Financial Accounting Standards Board (FASB) announced the issuance of Statement No. 161, Disclosures about Derivative Instruments and Hedging Activities, (FAS 161). FAS 161 amends FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities, (FAS 133) and was issued in response to concerns and criticisms about the lack of adequate disclosure of derivative instruments and hedging activities. FAS 161 is focused on requiring enhanced disclosure on the following:
- how and why an entity uses derivative instruments and hedging activities
- how derivative instruments and related hedging activities are accounted for under FAS 133
- how derivative instruments and related hedging activities affect an entity’s cash flows, financial position and performance
To accomplish the three objectives listed above, FAS 161 requires:
- qualitative disclosures regarding the objectives and strategies for using derivative instruments and engaging in hedging activities in the context of an entity’s overall risk exposure
- quantitative disclosures in tabular format of the fair values of derivative instruments and their gains and losses
- disclosures about credit-risk related contingent features in derivative instruments
FAS 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, but early application is encouraged.
http://www.fasb.org/news/nr031908fas161.shtml
http://www.fasb.org/pdf/fas161.pdf