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GASB 53 Effective DateIn recent years the volume and number of derivative contracts used by governmental entities has grown substantially. As usage has expanded, the complexity and the sophistication required by the governmental entity have also increased. GASB issued GASB 53 in response to this exponential growth in the use of derivatives by governmental entities. GASB 53 is required to be used by all entities no later than the first fiscal year ending after June 15, 2009. Early implementation is encouraged by GASB.DerivActiv understands the requirements of GASB 53. Call us at 1-866-200-9012 to review your derivative portfolio. GASB 53 generally requires that the fair value changes of derivatives be recorded in investment income or loss, unless those derivatives qualify and pass one of the tests of an effective hedge, in which case the fair value changes are deferred. GASB 53 outlines the methods used to determine whether a derivative effectively hedges an identified risk and whether that derivative’s fair value change will be deferred or will be recorded as investment income or expense. MuniMarket Pulse Podcast on GASB 53To learn more about GASB 53 and the requirements for reporting, MuniMarket Pulse has produced an audio podcast interview with Jim Towne, Senior Vice President of DerivActiv on the subject. Listen Here.
Additional GASB 53 Footnotes RequiredIn addition to testing each derivative for effectiveness, the governmental entity must provide additional footnote disclosure about each derivative. The disclosure should outline the objective of the derivative (the risk being hedged) and provide a summary of the significant terms of the derivative. In addition, details about any termination triggers embedded in the derivative, any contingent liability that exists as a result of the derivative, and any collateral or netting arrangements must be disclosed. The following is a list of the specific risk items that will be required to be disclosed under GASB 53.
If you are interested in learning more about GASB 53 reporting, you can download a GASB 53 white paper here. |
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GASB 53 Derivatives GASB 53 Disclosure Requirments GASB 53 Effective Date GASB 53 Fair Value GASB 53 Guidance GASB 53 Hedging Derivatives GASB 53 Overview GASB 53 Quantitative Methods GASB 53 Reporting GASB 53 Services |
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