The IASB's exposure draft on hedging changes the focus of hedge accounting away from stringent rules to a more principles based approach which seeks to align accounting with companies’ risk management policies.
Overall this change in approach brings with it new hedge accounting opportunities due to a relaxation in the qualifying criteria for hedged items and hedging instruments and the risks that can be hedged. It is anticipated that a number of economic hedge arrangements that failed to meet hedge accounting criteria under IAS 39 would be acceptable under the proposals in the exposure draft.
The IASB has split the hedge accounting phase into two parts: general hedging and macro hedging. A review draft of the general hedge accounting model is now available on the IASB web site. The draft document will be available until December 2012 when the ISAB intends to proceed to finalise the requirements.