Under current hedge accounting guidelines, notes Aaron Cowan, head of Chatham Financial’s corporates accounting advisory team, companies have to hedge all changes in cash flows, a punitive approach because components of the cash flows may have little to do with the risk treasury is seeking to hedge. FASB’s proposal would allow companies to hedge components in hedging relationships involving nonfinancial items, as long as they are contractually specified.
Coming FASB Proposal Helps Hedge Accounting
By John Hintze, iTreasurer
September 2, 2016