The Financial Accounting Standards Board released a proposed Accounting Standards Update on June 17, the purpose of which is to improve interest rate risk hedging and net investment hedging accounting guidance.
During the FASB’s 2025 agenda consultation project and other outreach, stakeholders emphasized three separate 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:
- Permit an entity to hedge interest rate risk for held to maturity debt securities.
- Amend the current GAAP definition of the secured overnight financing rate overnight index swap rate to permit designation of any tenor of SOFR.
- 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.
Recommended Articles
“To address stakeholders’ concerns and align with the objectives of the Board’s recently completed hedging projects, in particular Accounting Standards Update No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, and Accounting Standards Update No. 2025-09, Derivatives and Hedging (Topic 815): Hedge Accounting Improvements, the amendments in this proposed Update are intended to better reflect the economics of an entity’s risk management activities in its financial statements. The proposed amendments also are intended to enhance the operability of hedge accounting,” the ASU states.
Stakeholders have until Aug. 17, 2026, to review and provide comments on the proposed ASU.
Sign in to get access to this free resource, and all of our whitepapers and reports.
Download this content today!
Register Now Already registered? Click here to Log In
