• Service: Audit, IFRS
  • Date: 11/21/2013

New standard provides more hedging opportunities 

A new general hedge accounting standard issued by the IASB this week – part of IFRS 9 Financial Instruments (2013) – will align hedge accounting more closely with risk management.

The new standard does not fundamentally change the types of hedging relationships or the requirement to measure and recognise ineffectiveness; however, more hedging strategies that are used for risk management will qualify for hedge accounting.

Assessing the effectiveness of a hedging relationship will require more judgement, and the application guidance in some areas remains complex. Significant effort may be needed to analyse the requirements and their impact, while changes to current practice may lead to additional systems requirements.

The mandatory effective date is still to be determined, but entities can early adopt the new general hedging model if they also apply all existing IFRS 9 requirements at the same time.

Hedge accounting moves closer to risk management (2013/19)

Feature image
This In the Headlines looks at the IASB's new hedge accounting standard, which forms part of IFRS 9 Financial Instruments (2013).

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