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Financial Instruments (IAS 39 Replacement): Hedge Accounting


In its third phase of the project to replace IAS 39 Financial Instruments: Recognition and Measurement, the IASB addressed the review of IAS 39 requirements on hedge accounting. The IASB's project objective was to improve the usefulness of financial statements for users. The project scope entailed hedge accounting of both financial and non-financial hedged items.
  1. The exposure draft issued in December 2010 addressed general hedge accounting while the requirements on portfolio hedge accounting should be addressed in a separate standard. EFRAG's comment letter on the exposure draft on Hedge Accounting supported the proposed model, as it provided a number of significant improvements that would make hedge accounting more accessible. The IASB completed its redeliberations on the general hedge accounting model in September 2011.
  2. In May 2012, the IASB decided that the next due process step in the macro hedging project would be the issuance of a Discussion Paper instead of an Exposure Draft. Consequently, the macro hedging project was separated from IFRS 9, to allow for the timely finalisation of the remainder of IFRS 9 in time for the mandatory effective date of IFRS 9 (2015).
  3. The IASB published the Review Draft Hedge Accounting (RD) on 7 September 2012. EFRAG conducted a joint field-test of the Review Draft Hedge Accounting in partnership with the ANC, FRC, ASCG and the OIC National Standard Setters. The main purposes of the field-test were to test the operationality of the proposals, and to gather information to assess the quality and effects of the future accounting standard and the usefulness of the information as a result from applying the requirements, as well as to assess the level of effort required to implement and apply the requirements. The Review Draft introduces significant changes to the current general hedge accounting requirements as well as a few macro hedges.
EFRAG published two comment letters to the IASB following the Review Draft:
  1. On 18 January 2013 EFRAG issued its letter to the IASB commenting on the IFRS 9 Hedge Accounting Review Draft. EFRAG's comments reflected the results of the field test carried out by EFRAG in partnership with the ANC, ASCG, FRC and OIC.
  2. On 22 March 2013 EFRAG communicated the impact on current macro hedging practices of the transition between IAS 39 and the Review Draft .

For further information on all phases of the development of IFRS 9, please refer to the following project: IFRS 9 - Financial instruments 

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