For More Information,
Please Contact:
Ruth Ainslie, ISDA,
(212) 332-1200; Fax (212) 332-1212; rainslie@isda.org
ISDA COMMENTS ON PROPOSED ACCOUNTING CHANGES
AND IRS HEDGING REGULATIONS
NEW YORK, Wednesday, May 2, 2001 – The International Swaps and Derivatives Association has submitted separate comment letters addressing proposed U.S. tax regulations and U.S. accounting standards, each with potential impact on swap transactions. Both comment letters are available on ISDA’s web site: www.isda.org.
FASB Liabilities vs.
Equities Exposure Drafts - On April 30, ISDA submitted a comment letter
regarding the Financial Accounting Standards Board’s (FASB) Proposed Statement
of Financial Accounting Standards, Accounting
for Financial Instruments with Characteristics of Liabilities, Equity or Both
and the Proposed Amendment to FASB
Concept Statement No. 6 to Revise the Definition of Liabilities
(collectively the “Exposure Drafts”). ISDA
takes the position that current definitions of liabilities and of equity as
“residual interest” are adequate and suggests that the Board reconsider
the proposed changes. Because the Exposure
Drafts will change the accounting and reporting for common items such as
minority interest and convertible debt and because certain derivatives,
including those commonly used to hedge share repurchases, would be reported as
liabilities rather than equity, ISDA proposes that the current accounting model
for these instruments be retained. ISDA is unaware of problems with the
existing FASB guidance, including recently added guidance, and accordingly
concludes that the proposed changes are not warranted.