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IBOR reform and IFRS

IBOR reform and IFRS

Considering the impacts of benchmark interest rate reform on IFRS accounting

Considering the impacts of benchmark interest rate reform on IFRS accounting

Considering the impacts of benchmark interest rate reform on IFRS accounting

Standard setters are currently considering the effects of unprecedented reform of interbank offered rates (IBOR) – the benchmark interest rates that underpin the measurement of many financial instruments – on existing financial reporting requirements.

The International Accounting Standards Board (the Board) is engaged in a two-phase process of amending its guidance to assist in a smoother transition away from IBOR.

  • Phase one – The first phase of amendments to IFRS 9, IAS 39 and IFRS 7 focused on hedge accounting issues related to uncertainties arising in the period leading up to the replacement of IBOR. The final amendments were issued in September 2019 and amended specific hedge accounting requirements to provide relief from potential effects of the uncertainty caused by IBOR reform. The amendments come into effect from 1 January 2020 but early application is permitted. The amendments are mandatory for all hedge relationships directly affected by interest rate benchmark reform.
  • Phase two – The Board has started work on Phase 2 commencing October 2019. The second phase of its project focuses on financial reporting issues that may arise when IBOR are either reformed or replaced. 

Read our web articles for an overview of the final amendments of Phase one and a summary of recent Board meetings on Phase 2 issues.

You can also find out more about the Board’s IBOR reform project on ifrs.org.

Bookmark this page and stay tuned for further updates in the coming weeks.

 

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