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IBOR Reform and the Effects on Financial Reporting – Phase I [ED]

Next steps:

The IASB aims to finalize and issue the amendments to IAS 39 and IFRS 9 as soon as possible (no date specified)

Last updated:

August 2019



Interest rate benchmarks such as interbank offer rates (IBORs) play an important role in global financial markets. These benchmarks index a wide variety of financial products worth trillions of dollars and other currencies, ranging from mortgages to derivatives.

Market developments have undermined the reliability of some existing benchmarks. In this context, the Financial Stability Board has published a report setting out recommendations to reform such benchmarks. 

Some jurisdictions have already made clear progress towards replacing existing benchmarks with alternative, nearly risk-free rates (RFR). This work has, in turn, led to uncertainty about the future of existing interest rate benchmarks, which may affect companies’ financial reporting.

In 2018, the International Accounting Standards Board (the Board) noted the increasing level of uncertainty about the long-term viability of some interest rate benchmarks and decided to add a project to its agenda to consider the financial reporting implications of the reform.

In its outreach with stakeholders, the Board identified two groups of accounting issues that could have financial reporting implications. These are:

  1. pre-replacement issues—issues affecting financial reporting in the period before the replacement of an existing interest rate benchmark with an alternative RFR; and
  2. replacement issues—issues that might affect financial reporting when an existing interest rate benchmark is replaced with an alternative RFR.

At the time of the Board’s discussions leading to the Exposure Draft (published in May 2019), the specific conditions and details of the replacement have yet to be finalized. The Board, therefore, decided to monitor developments in this area and, as more information becomes available, the Board will assess the potential implications of the replacement issues and determine whether it should take any action.

The Board decided to prioritize the pre‑replacement issues because they are more urgent. Therefore, the Exposure Draft published in May 2019 addresses only the following hedge accounting requirements that are based on forward-looking analysis:

  1. the highly probable requirement;
  2. prospective assessments; and
  3. separately identifiable risk components.

Other than these specific amendments, the hedge accounting requirements would be unchanged.


Other Developments

July 2019

On July 29, 2019, the IASB® staff updated the work plan to indicate that the Board expects to review the Exposure Draft feedback in September 2019.

May 2019

On May 13, 2019, the AcSB issued its Exposure Draft that corresponds to the IASB’s Exposure Draft on this topic. Comments are requested by June 17, 2019.

On May 3, 2019, the IASB published an Exposure Draft Interest Rate Benchmark Reform (Proposed amendments to IFRS 9 and IAS 39) that constitutes a first reaction to the potential effects the IBOR reform could have on financial reporting. Comments are requested by June 17, 2019.

March 2019

On March 14, 2019, the IASB® staff updated the work plan to indicate that the Board will issue an Exposure Draft in May 2019.

January 2019

On January 25, 2019, the IASB staff updated the work plan to indicate that the Board expects to issue an Exposure Draft in Q2/2019.

December 2018

On December 14, 2018, the IASB staff updated the work plan to indicate that the Board expects to issue an Exposure Draft in the first half of 2019.

September 2018

On September 20, 2018, the IASB staff up­dated the work plan to in­di­cate that the Board plans to decide the project direction in December 2018.


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