FASB requires new liquidity and interest rate disclosures

The Financial Accounting Standards Board (FASB) has proposed new regulations that would require companies to provide more disclosures about liquidity and interest rate risks.

The new standards, similar to those required by the International Financial Reporting Standards (IFRS), list four required disclosures:

  1. All entities must provide an available liquid funds table which reports available liquid funds, as well as borrowing availability (such as lines of credit) and loan commitments.
  2. Financial institutions must disclose a liquidity gap maturity analysis table. This table must show the expected maturity of financial instruments in various classes, as well as off-balance-sheet financial commitments. The table must explain significant changes in liquidity gaps.
  3. Companies not defined as financial institutions are required to publish an expected cash flow obligations table disaggregated by expected maturities. Content must include obligations by predefined time intervals, including recorded liabilities and off-balance-sheet commitments. As above, the table must explain significant changes from the prior reporting period.
  4. Depository institutions must disclose a time deposits table showing time deposits and brokered deposits over the previous four quarters.

Interest rate disclosures

In addition, financial institutions must disclose:

  • A repricing gap analysis table that shows when interest rates for financial instruments reset by specific time intervals, including carrying amounts, yields, and duration; and
  • An interest rate sensitivity table that shows the effect on after-tax net income and shareholders' equity of certain movements in market interest rates.