US Generally Accepted Accounting Principles

Responses and comment letters on key issues to US standards setters, including the FASB and the SEC.

DateTitle / DescriptionDocuments
January 4, 2017
CCPs’ rule book changes on the settled-to-market model and impact on hedge accounting
On January 4, 2017, ISDA’s Accounting Committee issued a confirmation letter to the Staff of Office of the Chief Accountant of the Securities and Exchange Commission (SEC) related to an ISDA whitepaper on the accounting Impact of central counterparty rule book changes. The SEC staff confirmed all the conclusions of the ISDA Accounting Committee outlined in the whitepaper and follow-up submission – namely i) that the changes to the rule books of LCH and CME, as supported by legal opinions from external counsel, should result in the presentation of variation margin amounts as settlement of the derivative exposure and not collateral against it for purposes of applying the accounting and presentation guidance in ASC 815 (US GAAP covering derivatives and hedging); and ii) that the de-designation and re-designation of existing hedging relationships under ASC 815 would not be required solely because of these changes to the respective CME and LCH rule books. ISDA recognizes the significance of the continued application of hedge accounting when the hedging derivative has been affected by these rule changes and its importance to clearing members and end users.
ISDA SEC VM Settlement Confirming letter.pdf ISDA VM Settlement Whitepaper final .pdf LCH_STM_Model_Responses_to_SEC_final (003).pdf VM as settlement_Additional paper for SEC final  (003).pdf
November 8, 2016
ISDA responds to the FASB on improvements to hedge accounting rules
On November 4, 2016, ISDA’s Accounting Committee responded to a Financial Accounting Standards Board proposal on Derivatives and Hedging (Topic 815), which proposes certain modifications to the hedge accounting rules. In the letter, ISDA stressed that the primary focus of these efforts is to make hedge accounting more consistent with risk management practices and less complicated for practitioners to apply in certain areas.
ISDA-Hedging-Comment-Letter- 04112016.pdf
October 15, 2015
Consideration of Accounting Analysis for CCP Recovery and Continuity Tools
This paper examines some factors that central counterparties (CCPs) should consider in structuring partial tear-up methodologies so as not to contravene rules on offsetting under the applicable accounting standards, which would render cleared derivatives uneconomical. The paper notes that CCPs can structure partial tear-up in a number of ways. Whatever the structure, the CCP’s methodology for partial tear-up should be transparent, written in its rule book, available to all potentially affected parties and should respect US GAAP and IFRS accounting standards.
ISDA Accounting Committee_CCP Recovery tools White Paper -  Oct 13 2015 FINAL.pdf
October 7, 2015
ISDA response to the FASB exposure draft on the effect of derivative contract novations
On October 5, ISDA’s Accounting Committee responded to a consultation issued by the Financial Accounting Standards Board (FASB) seeking views from all stakeholders on the effect of derivative contract novations on existing hedge-accounting relationships. ISDA welcomes the proposal on the novation of derivatives and hedge accounting. We agree with the exposure draft’s conclusion that a change in the counterparty to a derivative instrument that has been designated as the hedging instrument in a hedging relationship under Topic 815, should not, in and of itself, require the de-designation of the relationship, provided that all other hedge-accounting criteria continue to be met. The ability to continue a hedge-accounting relationship under Topic 815 upon novation of a designated derivatives contract would help eliminate diversity in practice, simplify the application of hedge accounting, and provide more decision-useful information to users of financial statements.
ISDA Comment Letter Novations 05102015 final web site.pdf
October 7, 2015
ISDA response to the FASB exposure draft on contingent put and call options in debt instruments
On October 5, ISDA’s Accounting Committee responded to a consultation issued by the Financial Accounting Standards Board (FASB) seeking views from all stakeholders on contingent put and call options in debt instruments Topic 815. ISDA welcomes the clarification provided by the exposure draft on the treatment of contingent puts and calls. We believe the clarifications to Topic 815 provided in the exposure draft will alleviate concerns about the treatment of these contingent options and reduce existing diversity in practice.
ISDA Comment Letter_Contingent Puts  Calls 05102015 final web page.pdf
April 30, 2015
ISDA response to the to the FASB’s exposure draft on hybrid financial instruments
On April 30, ISDA’s Accounting Committee responded to the Financial Accounting Standards Board’s (FASB) exposure draft on Disclosures about Hybrid Financial Instruments with Bifurcated Embedded Derivatives (Derivatives and Hedging – Topic 815). The FASB proposed requiring an entity to disclose information that would link an embedded derivative that is bifurcated from a hybrid financial instrument to its host contract.
ISDA Comment Letter - Discls about Hybrids ED final web site.pdf
May 15, 2013
ISDA Final Comment Letter to FASB's proposed Accounting Standards Update on Classification and Measurement of Financial Instruments
File Reference Number 2013-220, Proposed Accounting Standards Update, Financial Instruments-Overall (subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities
ISDA CM Comment letter - Final (2).pdf
April 19, 2013
ISDA Comment Letter to FASB on File Reference Number EITF 13A
ISDA Comments on Proposed, Exposure Draft, Derivatives & Hedging (Topic 815) - Inclusion of the Fed Funds Effective Swap Rate (or Overnight Index Swap Rate) as a Benchmark Interest Rate for Hedge Accounting Purposes.
ISDA Fed Funds Comment Letter Final-Format4.19.pdf
December 21, 2012
ISDA Comment Letter to FASB on File Reference Number 2012-250
ISDA Comments on Proposed Accounting Standards Update: Balance Sheet (Topic 210) - Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities
FASB File Ref No  2012-250 ISDA Final Comment Letter.pdf
June 29, 2012
Investment securities - interlink between accounting and regulations -- AFS and OCI treatment under Basel III – removal of prudential filters and interaction with accounting rules under US GAAP and IFRS
ISDA letter to global regulators (including Basel, Fed, IASB, FASB, OCC, European Commission) expressing ISDA’s concerns on the Basel III proposal to remove the filters for Tier 1 capital for the OCI/AFS classification categories and the timing differences of the implementation of the new provisions under Basel III and its interaction with accounting rules under IFRS and US GAAP and the recent proposals on the classification of financial instruments.
ISDA Letter to regulators on AFS filter  final.pdf