Change to LIBOR & Other Reference Rates: Financial Accounting & Reporting Issues Webinar (1 Hour)

Overview: 

The upcoming phase-out of the London Inter-bank Offered Rate (LIBOR) in favor of alternative reference rates will lead to extensive changes in global finance. LIBOR is used extensively in the US and global markets as a reference interest rate in a broad range of financial instruments and commercial agreements, but banks that report the information used to set this rate will no longer be required to do so after 2021. Regulators in various jurisdictions have been working to replace LIBOR and other interbank-offered rates with reference interest rates that are more firmly based on actual transactions from liquid markets.

Objective: 

This timely webinar will explore how countless contracts—such as derivative contracts and variable rate debt agreements—will need to be modified as a result of the transition. You will also learn about accounting changes that could be costly and burdensome, and which could have significant effects on financial reporting, including increased earnings volatility.

Emphasis: 
  • Transition from LIBOR—the Basics
    – Who does LIBOR replacement affect and how?
    – Governance structure
    – Processes and controls
    – Updates to IT systems
    – Industry progress
    – Market liquidity
    – Unknowns
       – SOFR term structure
       – Transition timing
  • ARCC Recommended Best Practices
    – Regulatory
    – Accounting
    – Operational
  • FASB—ASU 2020-04
    – Contract modification to replace
       LIBOR
       – Which contracts should be
          analyzed?
    – Proposed accounting standard
       update—Reference Rate
       Reform (Topic 848)
       – Criteria for relief from
          modification accounting
       – Relief from certain hedge
          accounting requirements
       – One-time transfer from held
          to maturity
    – Expected impact of adoption
       of ASU
    – Processes and controls
    – Updates to IT systems
  • IASB Approach & Changes
    – Key reliefs related to:
       – Risk components
       – “Highly probable” requirement
       – Prospective assessments
       – IAS 39 retrospective
          effectiveness test
       – Recycling of cash flow
          hedging reserve
    – Scope of amendments
  • Disclosure Examples—How Are Companies Reflecting Reference Rate Reform?
Bottom
Prerequisite: 

None.

Preparation: 

No advance preparation required.

Level of Knowledge: 

Update.

CPE Credit: 
1.00
NASBA Field of Study: 
Accounting