FASB Mulls U.S. Derivs Accounting Change

Accounting rulemakers are considering a proposal under which U.S. banks may be required to bring billions of dollars of additional derivatives exposure onto their balance sheets, Financial Times reports. The Financial Accounting Standard Board (FASB) and International Financial Reporting Standards (IFRS) are planning a common approach to the presentation of financial assets and liabilities on balance sheets.

Under current U.S. rules, banks have greater scope to offset money owed to and from a given counterparty, rather than presenting two gross figures. The FASB and IFRS argue that figures should be offset only when a bank has the right to settle with its counterparty in all circumstances, including that company’s default or bankruptcy.

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