In March of 2008, the Financial Accounting Standards Board (FASB) issued FASB Statement No. 161, Disclosures about Derivative Instruments and Hedging Activities, to require enhanced disclosures about derivative instruments and hedging activities. Since that time, questions have been raised about the effective date stated in Statement No. 161:
“This Statement shall be effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. Early application is encouraged.”
With respect to this effective date, financial statement preparers have wondered whether the disclosure requirements of Statement No. 161 are effective for financial statements issued for:
- Fiscal years that begin after November 15, 2008, and interim periods in those fiscal years; or
- The first fiscal period (i.e., interim period) that begins after November 15, 2008, regardless of whether that fiscal period is the first interim period in the entity’s fiscal year.
We believe that the disclosure requirements of Statement No. 161 are effective for financial statements issued for a reporting period that begins after November 15, 2008, regardless of whether that reporting period is the first interim period in the entity’s fiscal year. For example, if an entity’s fiscal year end is June 30, 2008, the disclosures required by Statement No. 161 must be provided in its interim financial statements for the three months ending March 31, 2009 because the entity’s third fiscal quarter beginning on January 1, 2009, will be its first reporting period that begins after November 15, 2008. |
