FASB Proposed Hedge Accounting Update (Topic 815) 2026
If your company uses derivatives to manage interest rate or currency risk, a new proposal from the Financial Accounting Standards Board is worth reading now. On June 17, 2026, the FASB released a proposed Accounting Standards Update to Derivatives and Hedging (Topic 815) aimed at making hedge accounting better reflect how companies actually manage risk.
At SW Accounting & Consulting Corp, we help Los Angeles businesses apply the hedging rules and document them for audit. Below we break down the three proposed changes, what they would mean in practice, and the August 17, 2026 comment deadline.
What did the FASB propose for hedge accounting? 📊
The proposed Update makes three limited, targeted amendments to Topic 815 so that financial statements better reflect the economics of a company’s risk management activities and so hedge accounting is easier to apply.
The FASB says stakeholders raised these issues during its 2025 agenda consultation and other outreach. Rather than a sweeping overhaul, the Board proposes three focused fixes that build on its earlier hedging projects (ASU 2017-12 and ASU 2025-09). You can read the proposal on the FASB’s website.
Change 1: Hedging interest rate risk on held-to-maturity securities 🏦
The proposal would permit an entity to hedge the interest rate risk of held-to-maturity (HTM) debt securities.
Under current guidance, a company that classifies a debt security as held to maturity is generally limited in how it can apply fair value hedge accounting to that security’s interest rate risk. The proposed change would let entities designate HTM securities in interest rate hedges — aligning the accounting with a common risk management strategy for banks and other holders of fixed-rate debt.
Change 2: Any tenor of SOFR 📈
The proposal would amend the definition of the SOFR overnight index swap (OIS) rate to permit designation of any tenor of SOFR as the hedged benchmark rate.
As the market has moved from LIBOR to the Secured Overnight Financing Rate, companies hedge across a range of SOFR tenors. Today’s definition can be restrictive. Allowing any tenor of SOFR to be designated would give preparers flexibility to match the hedge to the actual instrument they are managing.
Change 3: More eligible net investment hedges 🌐
The proposal would expand the population of eligible net investment hedging instruments by permitting certain float-to-float cross-currency swaps with different reset dates.
Companies with foreign operations hedge the currency risk of their net investment in those operations. The proposed change would let more cross-currency swaps qualify — specifically float-to-float swaps whose legs reset on different dates — so the accounting can follow a wider set of real-world hedging instruments.
| Proposed change | Who it helps |
|---|---|
| Hedge interest rate risk on HTM debt securities | Banks and holders of fixed-rate debt |
| Designate any tenor of SOFR | Any entity hedging interest rate risk post-LIBOR |
| Allow certain float-to-float cross-currency swaps | Multinationals with net investment hedges |
Hedge accounting rewards good documentation. In our experience, the companies that adopt changes like these smoothly are the ones that keep clean hedge designation memos and effectiveness testing from day one. If you hold HTM securities or run net investment hedges, it is worth reviewing your current designations now so you are ready if the proposal is finalized.
Nothing here changes today’s accounting. The document is an exposure draft open for public comment through August 17, 2026. The FASB may revise or drop provisions before issuing a final ASU, and an effective date would be set later. Do not change your hedge accounting based on the proposal alone.
- The FASB proposed three targeted hedge accounting changes to Topic 815 on June 17, 2026.
- Highlights: hedge interest rate risk on HTM securities, designate any tenor of SOFR, and allow more net investment hedges.
- The goal is to better reflect real risk management and make hedge accounting easier to apply.
- It is a proposal open for comment through August 17, 2026 — current GAAP is unchanged.
Frequently asked questions
No. It is a proposed Accounting Standards Update open for public comment. Current Topic 815 guidance continues to apply until (and unless) a final ASU is issued.
Stakeholders have until August 17, 2026 to review the proposed ASU and submit comments to the FASB.
Permitting interest rate risk hedges on held-to-maturity debt securities, allowing designation of any tenor of SOFR, and expanding eligible net investment hedging instruments to include certain float-to-float cross-currency swaps.
Financial institutions and other holders of fixed-rate debt, any company hedging interest rate risk with SOFR, and multinationals that hedge the currency risk of a net investment in foreign operations.
How can SW Accounting help? 💼
At SW Accounting & Consulting Corp, we help LA-area companies apply Topic 815, document hedge designations and effectiveness, and prepare for standard-setting changes like this proposal. If you use derivatives to manage interest rate or currency risk, talk to us about whether these changes could simplify your accounting.
Disclaimer: This article is for informational purposes only and is not accounting, tax, or legal advice. Consult a qualified professional about your specific situation. Primary source: FASB, Proposed Accounting Standards Update, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Interest Rate Risk Hedging and Net Investment Hedging (issued June 17, 2026; comment deadline August 17, 2026); building on ASU 2017-12 and ASU 2025-09.
