Hedge accounting: How new guidance will impact your risk strategy

Mar 24, 2026

Nick Milone, PwC partner advising on derivatives and hedging. Chip Currie, PwC partner with deep experience in accounting for financial instruments. They walk through FASB’s recent hedge-accounting changes, the new choose-your-rate debt model, impacts on hedging nonfinancial asset purchases and sales, and what’s next on the FASB agenda.

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INSIGHT

Overview Of ASU 2025-09 Hedge Accounting Changes

FASB ASU 2025-09 targets five hedge accounting areas to reduce friction in practice.
It adds similar-risk guidance for cash flow hedges, a choose-your-rate debt model, component/subcomponent hedges for nonfinancials, written-option relief, and dual-hedge changes.

INSIGHT

Choose Your Rate Debt Allows Index Flexibility

The new choose-your-rate debt model preserves contractual borrowing flexibility while permitting hedge accounting if documented indices are listed.
Issuers list allowable indices (e.g., overnight and term SOFR) in hedge docs and assess effectiveness quarterly and when they switch indices.

INSIGHT

Hedge Components And Subcomponents Of Nonfinancial Purchases

The ASU broadens hedging of nonfinancial purchases by allowing component and subcomponent designations and applying the clearly-and-closely-related test.
That enables hedging of subcomponents (e.g., copper within copper wire) and spot-market components like regional commodity indices.

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In this episode, we explore the FASB’s latest hedge accounting guidance and what the changes mean for a company’s risk management strategies. We also preview what’s ahead for hedging on the FASB’s standard setting agenda.

In this episode, we discuss:

0:46 – Overview of recent hedge accounting updates
4:24 – New choose-your-rate debt hedge accounting model
10:09 – Updates affecting purchases and sales of nonfinancial assets
21:09 – What’s ahead on the FASB’s hedge accounting agenda
30:23 – Adoption considerations and transition opportunities

For more information, read our In depth, FASB issues hedge accounting improvements, and check out our Derivatives and hedging guide for additional background on existing guidance.

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About our guests

Chip Currie is a partner in PwC’s National office with 30 years of experience assisting companies in resolving complex business and accounting issues. He concentrates on the accounting for financial instruments under both current and emerging standards and works with many of the firm's largest financial services clients and a number of non-financial services clients on treasury-related matters.

Nick Milone is a partner in PwC’s Financial Markets & Real Estate practice. He advises companies on current accounting issues, developments, and the application of accounting standards. Nick provides accounting advisory services to many of PwC’s clients on structured transactions, derivatives and hedging activities, transfers of financial assets, securitizations, financings, investments, valuation, and other issues.

About our guest host

Diana Stoltzfus is a partner in PwC’s National Office who helps to shape PwC’s perspectives on regulatory matters, responses to rulemakings and policy development, and implementation related to significant new rules and regulations. Prior to rejoining PwC, Diana was the Deputy Chief Accountant in the Office of the Chief Accountant (OCA) at the SEC where she led the activities of the OCA’s Professional Practices Group.

Transcripts available upon request for individuals who may need a disability-related accommodation. Please send requests to us_podcast@pwc.com.

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