Reporting Requirements for Annual Financial Reports of State Agencies and Universities

Notes & Samples

NOTE 7 – Derivative Instruments
Investment Derivative Instruments Disclosures

Agencies must include the total balances of investment derivative instruments in Note 7 Derivative Instruments Overview and Activity Table Summary.

GASB 72, paragraph 81, requires disclosures on fair value measurement techniques and the fair value hierarchy. For more information on fair value measurement and the fair value hierarchy, see Fair Value Measurement and Application.

Include investment derivative instruments disclosure detail text in Note 3. It is acceptable to refer to Note 3 for additional detail text about derivative instruments held for investment purposes within the Note 7 disclosure text.

Ineffective hedging derivative instruments are considered investments per GASB 53. If reclassifications occurred during the fiscal year, acknowledgment is required in the Deposit Investment Note Submission System (DINSS). Also disclose reclassifications in Note 3 and include the deferral amount reported within investment revenue upon the reclassification. Make separate risk disclosures for ineffective and effective hedges. It is not appropriate to combine information for ineffective and effective hedges.

For an example of this policy, see the sample notes for Note 3 and Note 7.