Timetable for hedge accounting discussions

The Boards discussed which issues related to hedge accounting should be addressed as part of the Financial Instruments project. The Boards noted that according to the project plan, both Boards pledged to publish a comprehensive ED on Financial Instruments in March 2010. Nonetheless, based on the discussions with the project team, any comprehensive review of hedge accounting would not be finished before end of May 2010 at the earliest.

The Boards therefore discussed possibilities of delaying the hedge accounting part of the project or addressing only a narrow set of issues related to hedge accounting.

Most of the Board members were concerned that the Board promised a comprehensive review of hedge accounting and anything less than a full comprehensive review would be criticised as unsatisfactory by constituents.

Moreover, some Board members believed that this time provided a unique opportunity for review of hedge accounting that might not be repeated for many years.

Consequently, the Boards decided to tackle the hedge accounting in its entirety, but to divide the hedge accounting part of the Financial Instrument project into two phases.

The Boards agreed to include in the FASB comprehensive ED to be published in March (as well as corresponding IASB ED) the parts of the hedge accounting that directly relate to the classification and measurement of financial assets and liabilities (that would most probably include the overall model for the fair value and cash flow hedging, effectiveness consideration as well as bifurcation by risk). On the other hand, issues related to non-financial items as well as portfolio hedging would be addressed in the second phase of the project. The IASB tentatively discussed that the second phase should be completed by June 2011.

The Boards would discuss at the next meeting the precise timetable of deliberations. The staff noted that special sessions would be necessary for completing the proposed timetable.

The IASB also held an IASB-only session on hedge accounting on Thursday 21 January 2010.