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CFA Institute issues second study on user perspectives on IFRS 7 disclosures

15 Jan 2013

The CFA Institute, a global association of investment professionals, has published a report entitled 'User Perspectives on Financial Instrument Risk Disclosures Under IFRS (Volume 2)', providing user insights on the disclosures of derivatives and hedging activities under IFRS 7 'Financial Instruments: Disclosures'.

The CFA Institute undertook a study regarding the quality of existing financial instruments risk disclosures, addressing credit, liquidity, market and hedging activities risk disclosures under IFRS 7. Volume 1 of the report was issued in November 2011. The newly issued Volume 2 proposes general and specific recommendations for improving these risk disclosures, including:

  • Holistic disclosures that focus on communication and not ‘mere compliance’ should be provided.
  • Materiality assessment of derivatives should be based on loss potential of derivatives and not on reported fair values.
  • Improved presentation, location, and integration of derivatives and hedging disclosures with other key risk disclosures.
  • Improved quantitative risk exposure disclosure.
  • Improved communication of derivatives use and hedging strategies.
  • Enhancement of disclosures related to effects of hedge activities on financial statements.

Click to view the full report User Perspectives on Financial Instrument Risk Disclosures Under IFRS (Volume 2) on the CFA Institute website.

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