Global Body Clarifies Accounting for Cash Flows From Derivatives

Cash flows from derivatives used to manage risk against fluctuations in the value of securities, currencies or other underlying assets should be treated in the same way as the risks being hedged against, global standard setters said Tuesday.

The International Accounting Standards Board rejected a staff suggestion that derivatives should simply be treated as operating expenses if that approach is more cost effective.

All 13 members of the board voted for the clarification as part of its ongoing project to change corporate cash flow statements—which together with income statements and balance sheets are the main way companies share financial results ...