• Service: Audit, IFRS
  • Type: Business and industry issue
  • Date: 12/17/2013

New standard provides more hedging opportunities 

The new general hedge accounting model issued by the IASB in November – 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.

First Impressions: IFRS 9 (2013) – Hedge accounting and transition

Hedge accounting and transition
This edition of First Impressions considers the requirements of IFRS 9 Financial Instruments (2013), including the new general hedging model.

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