The FASB has issued an Exposure Draft for public comment that is intended to better align the standards with ASU 2017-12, Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities as well as address concerns resulting from the implementation of other guidance related to reference rate reform. 

Overall, the Exposure Draft is intended to result in the Codification being easier to understand and apply by eliminating inconsistencies and providing clarifications. The Exposure Draft would expressly allow certain commonly used methods to assess risk characteristics and evaluate hedge effectiveness. Additional clarifications are included related to hedges of nonfinancial forecasted transactions and foreign currency denominated debt. 

The Exposure Draft would be applied prospectively for existing hedging relationships at the adoption date with early adoption permitted. Additionally, in certain circumstances, entities may be permitted or required to modify key terms of existing hedging relationships. However, these modifications would not require dedesignation of the hedged status. The FASB requested feedback on a number of questions related to the Exposure Draft. 

The full text of the Exposure Draft can be found here. 

Readers should not act upon information presented without individual professional consultation.