Interest Rate Swaps: Is Current Disclosure Sufficient?
Loy, Carrie B.
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Interest rate swaps are becoming increasingly popular in financial markets today. Due to this increase in use, it was necessary for the Financial Accounting Standards Board and the Securities and Exchange Commission to regulate the disclosure of these financial derivatives. Although several pronouncements from both of the previously mentioned governing bodies have been released over the past few years, these minimum requirements do not fully present a company's financial position concerning their use of interest rate swaps. Since most publicly held companies are only meeting the minimum requirements, there are many third party users that are not given full disclosure. The purpose of this paper was to describe the current accounting standards set forth by the FASB and the SEC, to summarize the fundamental decisions of the FASB Exposure Draft, to provide some sample disclosures ITomcompanies annual reports, and finally to recommend improvements that will increase third party user's knowledge of a company's interest rate swap position.