The FASB acknowledged that the language used to describe the hedge accounting guidance in the proposed ASU differs from IFRS 9, but it expects that many common hedge accounting strategies will have similar outcomes.
The proposed ASU and IFRS 9 provide similar methodologies for measuring the hedged item in a partial-term fair value hedge of interest rate risk. The proposed update would allow qualitative assessments of hedge effectiveness if certain conditions are met, while IFRS 9 allows for either quantitative or qualitative assessment of hedge effectiveness.
However, there are some differences between FASB’s proposed ASU and IFRS 9 pertaining to the presentation of changes in the fair value of hedging instruments. FASB’s proposed amendments would eliminate the concept of hedge ineffectiveness, while IFRS 9 retains that concept. FASB’s proposed changes would require an institution to record the entire change in the fair value of the hedging instrument in the same income statement line item as the earnings effect of the hedged item, while IFRS 9 does not provide broad guidance on presentation.
FASB plans to decide on an effective date for the update after redeliberates about all the comments gets during the comment period and from the public roundtable meetings. Early application of the proposed amendments would be allowed at the beginning of any fiscal year before the effective date.