After approving a new standard for how to account for hedges in financial statements, now the Financial Accounting Standards Board is hearing requests for clarifications and technical corrections.

The board issued a proposed accounting standards update that would expand the list of U.S. benchmark interest rates permitted in the application of hedge accounting. The FASB is asking those with an interest in the accounting to review its proposal and comment by March 30, 2018.

FASB adopted Accounting Standards Update No. 2017-12 in August 2017 to simplify hedge accounting as the final step in its quest to overhaul all accounting requirements for financial instruments. While FASB undertook extensive rewrites of rules on how to recognize and measure financial instruments and how to account for credit losses or impairments, the board took a more surgical approach on hedge accounting rules.

FASB considered a number of approaches, but ultimately elected to make some targeted improvements to historic hedge accounting rules to make them easier for companies to apply. Ultimately, FASB’s revised accounting standard made it easier for companies to qualify for hedge accounting on certain transactions.

While the standard does not take effect on a mandatory basis until 2019, companies have been eager to elect the early adoption option provided in the standard so they could benefit sooner from the simpler accounting. That has led to some digging into the details of the requirements, which has raised some technical questions.

With respect to benchmark interest rates, FASB’s proposed update to the standard says U.S. GAAP permits entities to qualify for hedge accounting for hedges against interest rate risk using a handful of designated benchmark interest rates. Based on concerns over the sustainability of the London Interbank Offer Rate, or LIBOR, federal officials recently identified the Secured Overnight Financial Rate as a preferred alternative reference rate, so FASB proposes to modify GAAP accordingly. FASB says that should help companies avoid the potential cost and complexity that would come with using different cash flows and discount rates to measure hedge items and hedging instruments.

The board also has heard requests for clarification on prepayable financial instruments, specifically which instruments meet the definition of prepayables, which is important to determining hedge eligibility. FASB said during an open meeting it regarded financial instruments that meet the definition of prepayable to include:

Instruments that are exercisable and prepayable at any time,

Instruments with certain contingent prepayment terms, and

Instruments with conversion features.

The FASB is expected to meet again in March to discuss additional technical questions.

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