Financial Instruments 

    Accounting for financial instruments has been deemed the highest priority of both the FASB and IASB because of the role it played in the recent financial crisis. However, it is an extremely complex area without an easy solution making it difficult to predict what may happen and when. The topic has been divided into the following parts:
    • Impairment
    • Classification and measurement
    • Hedging
    All entities that have financial instruments would be affected by the proposed standard. However, the extent of the effect would depend upon the relative significance of financial instruments to an entity’s operations and financial position as well as the entity’s business strategy. While the Boards are still determining stance on each, an impairment standard may be possible sometime in 2014.
    The AICPA offers guidance on the Financial Instruments Project, including:
    The FASB also maintains separate project pages with further information.
    • Classification and Measurement (FASB)
    • Credit Impairment (FASB)
    • Hedge Accounting (FASB)

    Note that the IASB no longer classifies the Financial Instrument Project as a Memorandum of Understanding issue.

    AICPA Guidance and Advocacy Releases
    • June 11, 2013 FASB comment letter on the Proposed Accounting Standards Update, Recognition and Measurement of Financial Assets and Financial Liabilities
    • May 31, 2013, comment letter on Financial Instruments—Credit Losses
    • September 30, 2010 FinREC comment letter to FASB regarding the Exposure Draft of the Proposed Accounting Standards Update - Accounting for Financial Instruments and Revisions to the Accounting for Derivative Instruments and Hedging Activities (the ED)

    Copyright © 2006-2015 American Institute of CPAs.