MEDIA ADVISORY 04/08/11

Deadline for Comment on GASB’s Proposed Guidance for Applying Termination of Hedge Accounting Provisions Is April 15, 2011

Norwalk, CT, April 8, 2011—The deadline for submitting written comments on the Governmental Accounting Standards Board (GASB) Exposure Draft (ED), Derivative Instruments: Application of Hedge Accounting Termination Provisions (an amendment of GASB Statement No. 53), is April 15, 2011.

The ED proposes guidance that would amend requirements in Statement No. 53, Accounting and Financial Reporting for Derivative Instruments, to clarify application of its termination provisions. The focus of the ED is the replacement of a swap counterparty when the counterparty commits an act of default or a termination event—for example, when an interest rate or commodity swap counterparty enters into bankruptcy. When a new counterparty agrees to enter into a swap with the same terms, the ED addresses whether accumulated deferred fair value changes reported prior to a counterparty’s replacement should continue to be reported as deferred inflows and outflows.

The provisions of the proposed Statement are limited to when a swap represents a liability of a government, the replacement of the counterparty or its 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 relationship would not be considered to be terminated, and hedge accounting would continue to be applied.

The provisions of this proposed Statement would be effective for financial statements for periods beginning after June 15, 2011. Earlier application would be encouraged.

Constituents are urged to review the ED and provide comment by the April 15 deadline. Copies of the ED may be downloaded free of charge from www.gasb.org.

About the Governmental Accounting Standards Board

The GASB is the independent, not-for-profit organization formed in 1984 that establishes and improves financial accounting and reporting standards for state and local governments. Its seven members are drawn from the Board’s diverse constituency, including preparers and auditors of government financial statements, users of those statements, and members of the academic community. More information about the GASB can be found at its website www.gasb.org.