In June 2008, the Governmental Accounting Standards Board (GASB) issued GASB Statement No. 53, Accounting and Financial Reporting for Derivative Instruments, to address the recognition, measurement, and disclosure of information regarding derivative instruments entered into by state and local governments. Recently, the GASB issued a Guide to Implementation of Statement 53 on Derivative Instruments. The Guide provides answers to more than 100 questions on topics related to the implementation of Statement No. 53, including:
- The scope and applicability of Statement No. 53 with special emphasis on the normal purchases and normal sales scope exception;
- The definition of derivative instruments, focusing on the distinguishing characteristics of a derivative instrument - settlement factors, leverage, and net settlement;
- Embedded derivative instruments and when an embedded derivative instrument results in a hybrid instrument;
- Hedge effectiveness criteria and how to apply the methods of evaluating effectiveness - the consistent critical terms, the synthetic instrument, the dollar-offset, and the regression analysis methods; and
- Disclosures.
Statement No. 53 is effective for financial statements for reporting periods beginning after June 15, 2009. |
