A proposed accounting standards update on hedge accounting should be amended to align with the Financial Accounting Standards Board’s risk mitigation goals, the American Bankers Association said in comments to the FASB.
FASB in September issued a proposed accounting standards update to address some of the known hedge accounting issues. In a letter to the board, ABA said it was generally supportive of the changes outlined in the update. However, a proposed requirement to dedesignate an entire hedging relationship if one or more hedged risks in that relationship are no longer similar “does not align with the objectives of the proposed update,” the association said.
ABA instead recommended language that allows entities to dedesignate a portion of the hedging relationship rather than the entire relationship. “We believe the noted edits will better align the economic and accounting results of the risk mitigation activities,” the association said.
