On April 20, 2022, the Financial Accounting Standards Board (FASB) issued a proposed Accounting Standards Update (ASU) to address the following matters related to reference rate reform:

• Deferral of the sunset date for Topic 848, “Reference Rate Reform,” of the FASB’s Accounting Standards Codification (ASC), which provides temporary optional guidance intended to ease the burden of accounting for modifications to certain contracts, hedging relationships and other transactions affected by reference rate reform. The original sunset date provided for ASC 848 was December 31, 2022, which was based on expectations of when the London Interbank Offered Rate (LIBOR) would cease being published. However, in 2021, the UK Financial Conduct Authority delayed the intended cessation date for certain tenors of USD LIBOR to June 30, 2023. Therefore, to ensure the relief in ASC 848 covers the period of time during which a significant number of modifications may take place, the proposed ASU would defer the sunset date of ASC 848 to December 31, 2024.
• Amendments to the definition of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate. If finalized, the proposed ASU would amend the definition of the SOFR Swap Rate so that it no longer is limited to the OIS rate based on SOFR but would include other rates based on SOFR, such as SOFR term, as a U.S. benchmark interest rate under ASC 815, “Derivatives and Hedging.” The amendments would apply to all entities that apply hedge accounting for hedges of interest rate risk of recognized fixed-rate financial instruments and forecasted issuances of purchases of fixed-rate debt under ASC 815.

The amendments in the proposed ASU are expected to be effective for all entities upon issuance of a final ASU and would be applied prospectively. The proposed ASU is available for comment until June 6, 2022.