FASB seeks comment on hedge accounting guidance

FASB published a proposed Accounting Standards Update (ASU) that is intended to improve accounting guidance for interest rate risk hedging and net investment hedging.

The comment deadline is Aug. 17.

During FASB’s 2025 agenda consultation project and other outreach, stakeholders acknowledged the Board’s recent efforts to better align hedge accounting with the economics of entities’ risk management strategies, according to a news release.

Stakeholders emphasized three issues that could be addressed through limited, targeted amendments to the guidance that would provide preparers and investors with meaningful benefits by better reflecting the economics of risk management activities.

The proposed ASU would:

1. Permit an entity to hedge interest rate risk for held-to-maturity (HTM) debt securities.
2. Amend the current GAAP definition of the secured overnight financing rate (SOFR) overnight index swap rate to permit designation of any tenor of SOFR.
3. Expand the population of eligible net investment hedging instruments by permitting the use of certain float-to-float cross currency swaps with different reset dates.

The amendments in the proposed ASU would apply to any entity that elects to apply hedge accounting guidance.

FASB seeks comment on guidance for cash balance plans

FASB also published a proposed ASU designed to improve guidance for certain market-return cash balance plans based on a recommendation from its Emerging Issues Task Force.

The comment deadline is Aug. 10.

Stakeholders expressed concern that current guidance may not fully reflect the economics of these plans, according to a news release. To address those concerns, the release said, the amendments in the proposed ASU would specify the discount rate required to be used to measure the benefit obligation for certain market-return cash balance plans.

To comment on this article or to suggest an idea for another article, contact Kevin Brewer at Kevin.Brewer@aicpa-cima.com.