The task force reached a consensus on EITF Issue Number 03-11 – Reporting Gains and Losses on Derivative Instruments That Are Subject to FASB Statement No. 133 – and found “determining whether realized gains and losses on derivative contracts not ‘held for trading purposes’ should be reported on a net or gross basis is a matter of judgment that depends on the relevant facts and circumstances. Accordingly, continue to consider the indicators set forth in Issue 99-19,” according to Washington-based legal publisher BNA.
EITF, whose guidance now must be ratified by FASB, recorded the agreement as formal consensuses in an all-day meeting. It is expected that FASB will ratify the documents on the requirement that comparative financial statements for prior periods be reclassified to conform to the consensus.
Most companies will find little help in the recent consensus given the complexity of the regulation. In fact, a poll conducted by the Association for Financial Professionals (AFP) found that even when using derivatives tools, many companies choose not to take advantage of hedge accounting because of the complexity of FAS 133 (See Finance Chiefs Still Hate FAS 133 ).