HowWill Derivatives Reporting Standards Affect Risk Management Practices?
نویسندگان
چکیده
Accounting regulators on both sides of the Atlantic are working towards global convergence of U.S. and international accounting standards by 2005. One of the areas that the regulators have identified as a necessary requirement for convergence is the treatment of financial instruments such as derivatives. In the U.S., the Financial Accounting Standards Board (FASB) released Statement of Financial Accounting Standards No. 133 (SFAS 133) that became effective as of June 15, 2000. In Europe, the International Accounting Standard Board (IASB), the FASB’s European counterpart, require all firms within the European Union (EU) to report their derivatives under International Accounting Standards No. 39 (IAS 39) by January 1, 2005. Both SFAS 133 and IAS 39 require firms to initially measure all derivatives on their balance sheets at market value. The derivatives are then marked to market at every financial reporting date. Marking these derivatives to market results in unrealized gains or losses on firms’ financial state-
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