FASB Releases Proposed Update to Financial Instruments Standards

On November 19, 2018, the Financial Accounting Standards Board (FASB) released a proposed Accounting Standards Update relating to codification improvements in respect of financial instruments standards.

The FASB is a not-for-profit body that establishes financial accounting and reporting standards under U.S. GAAP. It is also “recognized by the Securities and Exchange Commission as the designated accounting standard setter for public companies.”

The proposed update is intended to “clarify and improve areas of guidance related to the recently issued standards on credit losses, hedging, and recognition and measurement.”

Specifically, the standards referred to are as follows:

  • Accounting Standards Update No. 2016-01, related to the “Recognition and Measurement of Financial Assets and Financial Liabilities” (issued January 2016);
  • Accounting Standards Update No. 2016-13, related to the “Measurement of Credit Losses on Financial Instruments” (issued June 2016); and
  • Accounting Standards Update No. 2017-12, related to “Targeted Improvements to Accounting for Hedging Activities” (issued August 2017).

Potential impact on XBRL

As part of the proposed Accounting Standards Update, the FASB acknowledged that “improvements to the U.S. GAAP Financial Reporting Taxonomy” would be required if the draft update was adopted in its current state.

The FASB goes on to note that after it “[…] has completed its deliberations and issued a final Accounting Standards Update, the proposed improvements to the Taxonomy will be finalized as part of the annual release process.”

The U.S. Securities and Exchange Commission (SEC) also noted that “The availability for public comment of the proposed U.S. GAAP financial reporting taxonomy update does not indicate Commission approval of any potential regulatory changes related to the EDGAR Filer Manual.”

How to comment

The proposed update is available for public comment, with comments from stakeholders and interested parties encouraged. Comments will be accepted until December 19, 2018, and can be submitted in a number of ways, including via the FASB’s website, email or in writing.

You can view the FASB’s press release here, as well as the proposed Accounting Standards Update.

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