Preparers and users of financial statements have their first chance to respond to proposals to amend certain accounting requirements to address uncertainties related to the ongoing reform of interbank offered rates (IBOR).
The International Accounting Standards Board’s latest exposure draft (ED) – Interest Rate Benchmark Reform – follows its recent discussions about amending IFRS 9 Financial Instruments and IAS 39 Financial Instruments: Recognition and Measurement. It proposes targeted relief regarding financial instruments qualifying for hedge accounting in the lead up to IBOR reform.
Proposed effective date 1 January 2020
What was clarified?
- to provide an exception for the IAS 39 retrospective assessment when a hedge is temporarily outside the 80-125% range during the period of uncertainty arising from the reform;
- to extend relief from the separately identifiable requirement for redesignation of hedged items in hedges where dedesignation and redesignation take place (e.g. macro hedges);
- to clarify that the end of application requirement should apply to each individual item within a designated group of items;
- to clarify that the scope of the proposed amendments would apply to all hedges that include interest rate benchmark-based cash flows for the hedged item and/or hedging instrument – e.g. certain cross currency hedges – that are directly affected by uncertainties arising from the reform; and
- to simplify the proposed disclosure requirements.
Look out for further updates at IBOR reform and IFRS and speak to your usual KPMG contact to find out more about the Board’s discussions.