Interest Rate Benchmark (IBOR) Reform [Completed]

Effective date:  

The fi­nal amend­ments were issued to the CPA Canada Hand­book on Feb­ru­ary 1, 2022. The amend­ments will ap­ply to an­nual fi­nan­cial state­ments end­ing on or af­ter Feb­ru­ary 1, 2022, with ear­lier ap­pli­ca­tion per­mit­ted, in­clud­ing in fi­nan­cial state­ments not yet au­tho­rized for is­sue.

 Last up­dated:

February 2022

Overview

At its meet­ing on June 16-17, 2021, the AcSB discussed proposals to include in an Exposure Draft to amend Section 3856, Financial Instruments, to address issues related to debt modification and hedge accounting resulting from IBOR reform.

The Board decided that the amendments will:

  • provide optional relief for debt modifications directly related to IBOR reform, allowing entities to account for these modifications as a continuation of the existing contract rather than an extinguishment; and
  • allow entities to update their hedge documentation to reflect changes resulting from IBOR reform without discontinuing hedge accounting.

The AcSB issued the Exposure Draft in September 2021.

The Board issued the final amend­ments to Section 3856, Financial Instruments, in Part II of the Hand­book on February 1, 2022 in order to make the re­lief avail­able when en­ti­ties pre­pare their 2021 year-end fi­nan­cial state­ments.

 

Other developments

February 2022

The fi­nal amend­ments to Section 3856 were issued to the CPA Canada Hand­book on Feb­ru­ary 1, 2022. The amend­ments will ap­ply to an­nual fi­nan­cial state­ments end­ing on or af­ter Feb­ru­ary 1, 2022, with ear­lier ap­pli­ca­tion per­mit­ted, in­clud­ing in fi­nan­cial state­ments not yet au­tho­rized for is­sue.

September 2021

On September 13, 2021, the Accounting Standards Board (AcSB) released an exposure draft Financial Instruments. The proposal provides an optional expedient for applying modification accounting and an exception to certain hedge accounting requirements in Section 3856, Financial Instruments. Applying to both private enterprises and NFPOs using Parts II and III of the CPA Canada Handbook – Accounting, these amendments aim to ease financial reporting burdens related to market-wide interest rate benchmark reform. Comments are requested by October 17, 2021.

 

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