Derivatives and hedging in the US: time to move on

Article Abstract:

The introduction of the Financial Accounting Standards Board's (FASB) Statement 133, 'Accounting for Derivative Instruments and Hedging Activities,' has finally ended the debate on how to account for derivatives. As intended by the Board, the new statement is bringing greater consistency as well as more comprehensive guidance to the accounting of derivative instruments and hedging activities. Furthermore, it promotes the Board's goal of improving the transparency of financial reports on the companies' use of derivative instruments. The discussion now shifts to the implementation of the new accounting standard. The FASB expects implementation problems to crop up since Statement 133 contains complex provisions and brings significant changes to accounting practice. In preparation, the Board has formed a group of experts who will answer questions about implementation.

Accounting, Financial Accounting Standards Board

---

A glow in the dark? The UK's FRS 13 should shed light on the murky world of derivatives and hedging

Article Abstract:

The UK Accounting Standards Board's Financial Reporting Standard (FRS) No 13, 'Derivatives and Other Financial Instruments: Disclosures,' seeks to shed light on the derivatives and hedging activities of British companies. Under the new standard, all companies with publicly-traded capital instruments within and outside the UK, all banks and all building societies are required to submit a brief report on the significance and consequences of their use of financial instruments. Such disclosures must be in both narrative and numerical forms. Insurance companies are exempt from the standard and other companies are only encouraged to comply. FRS 13 has a number of controversial provisions, perhaps the most contentious being those that require the capture of all hedges and the use of fair values for all financial instruments.

United Kingdom, Accounting Standards Board

---

Another cut at sharpening the treatment

Article Abstract:

The scandal surrounding the 1995 collapse of Barings has once again placed the spotlight on the risks associated with the use of derivatives instruments. Not surprisingly, regulatory initiatives aimed at curbing abuses of derivatives instruments have entered the agenda of accounting regulators in virtually all countries where these derivatives are traded. Guidance on the treatment of these hedging instruments, however, tend to be minimal. In the UK, for example, most regulations covering derivatives are based on interpretations of Statement of Standards of Accounting Principles (SSAP) 20, which touches on hedging instruments very briefly. A better reference would be the Financial Accounting STandards No. 52 and 80 published by the FASB in the US.

Similar abstracts:

• Abstracts: Agency costs and innovation: some empirical evidence. The impact of taxes on the choice of divestiture method
• Abstracts: Bank capital and equity investment regulations. The effect of bank monitoring on the investment behavior of Spanish firms
• Abstracts: Spending growth set to recover. UK consumer cycle: on the turn. Unrealistic expectations
• Abstracts: Crunch time for Bensons - the chips are down. Bensons serves up the cut-price potato crisp. Problem potatoes
• Abstracts: Korean presence keeps on growing. Business parks: the enthusiasm for out-of-town business parks in the 80s has been tempered by government interference and the need to satisfy staff on-site needs

This website is not affiliated with document authors or copyright owners. This page is provided for informational purposes only. Unintentional errors are possible.