The U.S. Financial Accounting Standards Board (FASB) has proposed new guidance designed to ease the potential burden on financial reporting as new benchmark reference rates are introduced over the next couple of years.
The proposal sets out exceptions from generally accepted accounting principles (GAAP) that firms could rely on as LIBOR benchmarks are replaced with transaction-based rates that may be less vulnerable to manipulation.
“The FASB is committed to providing stakeholders with the guidance they need to ease the process of migrating away from LIBOR and other interbank offered rates to new reference rates,” FASB chairman Russell Golden said in a statement.
“The board’s proposal will address operational challenges they have raised and ultimately help simplify the process while reducing related costs,” he added.
FASB, which launched a project to address potential accounting challenges that may emerge due to global benchmark reform, is seeking comments on the proposed guidance by Oct. 7.