Statements of Position



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This Statement of Position (SOP) amends the AICPA Audit and Accounting Guide Health Care Organizations (Guide) to address how nongovernmental not-for-profit health care organizations should report gains or losses on hedging and nonhedging derivative instruments under Financial Accounting Standards Board (FASB) Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended. The SOP requires the following: 1. Not-for-profit health care organizations should apply the provisions of FASB Statement No. 133 (including the provisions pertaining to cash flow hedge accounting) in the same manner as for-profit enterprises. 2. Not-for-profit health care organizations should provide all the disclosures required by paragraph 45 of FASB Statement No. 133, including disclosures related to reclassifications into earnings of gains and losses that are reported in accumulated other comprehensive income. Although those organizations are not otherwise required to report changes in the components of comprehensive income pursuant to paragraph 26 of FASB Statement No. 130, Reporting Comprehensive Income, such organizations should separately disclose the beginning and ending accumulated derivative gain or loss that has been excluded from the performance indicator (earnings measure), the related net change associated with current period hedging transactions, and the net amount of any reclassifications into the performance indicator in a manner similar to that described in paragraph 47 of FASB Statement No. 133. The SOP also amends the Guide to clarify that the performance indicator (earnings measure) reported by not-for-profit health care organizations is analogous to income from continuing operations of a for-profit enterprise. The provisions of the SOP are effective for fiscal years beginning after December 15, 2002. The provisions of the SOP should be applied prospectively as of the beginning of a fiscal year. Not-for-profit health care organizations that reported derivative gains or losses in a manner inconsistent with the conclusions of the SOP in financial statements issued prior to adoption of the SOP are not permitted to reclassify those gains or losses upon adoption. Those organizations are required to disclose in the notes to the financial statements what the performance indicator reported in the year of adoption would have been if the reporting practices followed before adoption of this SOP had continued to be applied.

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Derivative securities -- Accounting -- Standards -- United States; Hedging (Finance) -- Accounting -- Standards -- United States; Nonprofit organizations -- Accounting -- Standards -- United States; Health care -- Societies, etc. -- Accounting -- Standards -- United States


Accounting | Taxation


Originally published by: American Institute of Certified Public Accountants; Copyright and permission to reprint held by: American Institute of Certified Public Accountants.

Proposed statement of position : Accounting for derivative instruments and hedging activities by not-for-profit health care organizations, and clarification of the performance indicator;Accounting for derivative instruments and hedging activities by not-for-profit health care organizations, and clarification of the performance indicator; Exposure draft (American Institute of Certified Public Accountants), 2002, June 14



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