An FASB Perspective on the Objectives, Implementation, and Impact of FASB Statement No. 133

Innovation and dynamic growth in financial markets prompted the Financial Accounting Standards Board (FASB) to undertake an extensive project to create new accounting guidance for derivatives and hedging activities. With an understanding of the key aspects of FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities, and the major changes it invoked in practice, it is easy to see the crucial role the Derivatives Implementation Group (DIG) played in implementing the new guidance. Through the combined efforts of both the FASB and the DIG, portions of Statement 133 have been amended and a multitude of helpful implementation guidance has been published. This article covers the evolution of Statement 133 from the preliminary step of defining the Board9s objectives for the project to an evaluation of its overall success today, while incorporating an overview of the key aspects of Statement 133 and their impact on prior accounting practice.