IFRIC Interpretation 16
The Board discussed an issue that had been submitted by a constituent subsequent to the publication of IFRIC 16. The staff had satisfied itself (in consultation with Board members and an IFRIC member) that the constituent's issue was valid and had not been contemplated by the IFRIC when IFRIC 16 was being developed. The concern raised was that in some circumstances, while the total amounts of foreign exchange differences are indeed the same with and without hedge accounting, the split between the amounts included in profit or loss and foreign currency translation reserve would be different. Without hedge accounting, the foreign exchange difference arising from the hedging instrument would be included in profit or loss while the difference arising from the net investment would be included in the foreign currency translation reserve.
The Board agreed to amend IFRIC 16 paragraph 14 by deleting a parenthetical comment: '(except the foreign operation that itself is being hedged)'.
So this amendment can be in place in time to be used for 30 June 2009 interim financial reporting, the Board agreed that it should issue an exposure draft of the proposals for a 30-day comment period (the minimum permitted by the IASB's Due Process Handbook). It was acknowledged that it was unlikely that any amendment could be finalised in time to accommodate first quarter 2009 interim reporting.