Hedge Accounting Update Covers More Corporate Risk-Curbing (1)

Companies can apply a specialized accounting method that shields earnings from economic fluctuations to a broader range of risk management strategies under new guidance.

The Financial Accounting Standards Board published a final update Tuesday that aims to clarify and improve the hedge accounting framework in the US rulebook.

“The improvements will better reflect the economics of organizations’ risk management activities,” FASB Chair Richard Jones said in a statement.

Companies that want to minimize exposure to swings in interest rates, for example, can buy futures, options, or swaps to offset risks. These contracts qualify as derivatives, meaning US rules ...