Disclosures on Derivatives and Hedging Transactions

A Review of Best Practices

Ira G. Kawaller

FASB's disclosure requirements provide a fair amount of detail about derivatives and hedging transactions; yet, despite efforts by auditors to comply with them, readers of financial statements often find that these disclosures are not entirely satisfying. Some of the required information might be presented in a manner that is misleading or confusing. Perhaps more importantly, the discussion might fail to appropriately or adequately describe the nature or scale of the activities under consideration. The best practices described below can make disclosures on derivatives and hedging transactions more helpful to financial statement users.