The US Governmental Accounting Standards Board (GASB) has issued a proposal draft for applying termination of hedge accounting provisions.
The draft amends the GASB Statement No. 53, Accounting and Financial Reporting for Derivative Instruments.
The GASB said the provisions of the proposed draft statement are limited to when a swap represents a liability of a government, the replacement of the counterparty or credit support provider meets the criteria of an assignment or in-substance assignment, and other swap terms are unchanged. “When this is the case, the hedging derivative would not be considered to be terminated for accounting and financial reporting purposes, and hedge accounting would continue to be applied,” GASB said.
The draft is open for comment until 15 April.