This site uses cookies to provide you with a more responsive and personalised service. By using this site you agree to our use of cookies. Please read our cookie notice (http://www2.deloitte.com/ca/en/legal/cookies.html) for more information on the cookies we use and how to delete or block them.
The full functionality of our site is not supported on your browser version, or you may have 'compatibility mode' selected. Please turn off compatibility mode, upgrade your browser to at least Internet Explorer 9, or try using another browser such as Google Chrome or Mozilla Firefox.

Accounting for Dynamic Risk Management: A Portfolio Revaluation Approach to Macro Hedging (Proposed amendments to IFRS 9) [ED]

Comment period ended on October 17, 2014.

Next steps:

The IASB expects to develop its core model by the first half of 2019.

Last updated:

June 2018

Reach out to our IFRS 9 Specialist

Kerry Danyluk

Overview

As part of its comprehensive response to the global financial crisis, the IASB is replacing IAS 39 with an entirely new financial instruments accounting Standard, known as IFRS 9, Financial Instruments.  That project is in the final stages of completion.  However, the IASB decided to treat as a separate project the macro hedging component of these reforms in order to elicit views from a broader range of constituents.  The DP represents the first stage in this project, by seeking public comment on a possible approach to accounting for an entity’s dynamic risk management activities, namely the portfolio revaluation approach (PRA).

Under the PRA: (i) exposures that are risk-managed dynamically would be revalued for changes in the managed risk through profit or loss; (ii) fair value changes arising from risk management instruments that are used to manage this risk (derivatives) would also be recognized in profit or loss; (iii) the success of an entity’s dynamic risk management is captured by the net effect of the above measurements in profit or loss; and (iv) fair valuation of the risk exposures that are dynamically managed is not required.

The PRA also addresses the needs of users by providing a more comprehensive set of disclosures concerning an entity’s dynamic risk management activities.

 

Other developments

January 2018

On January 26, 2018, the IASB Staff updated this project to indicate that the IASB now expects to develop its core model by the first half of 2019. 

December 2017 

On December 18, 2017, the IASB staff updated the work plan to indicate that the IASB expects to publish a Discussion Paper for comment in 2019.

June 2017

In June 2017, the IASB staff updated the work plan to indicate that the IASB expects to issue a Discussion Paper in respect of this project in the 2nd half of 2018.

March 2017

On March 23, 2017, the IASB staff issued an updated Work Plan which indicates that the IASB expects to publish a Discussion Paper in respect of this project for comment after September 2017.

December 2016

On December 15, 2016, the IASB staff updated the Work Plan in respect of this project to indicate that the IASB expects to publish a Discussion Paper for comment after June 2017.

September 2016

On September 23, 2016, the IASB staff updated the Work Plan in respect of this project to indicate that the IASB expects to publish a Discussion Paper for comment sometime after March 31, 2017.

July 2016

On July 20, 2016, the IASB staff updated the Work Plan in respect of this project to indicate that the IASB expects to issue a Discussion Paper sometime after January 31, 2017.

October 2014

On October 23, 2014, the EFRAG, EFFAS, ABAF and the IASB published a Summary Report of their third user (investor) outreach event relating to the ED, which was held on July 7, 2014.  The event included: presentations from preparers explaining current practices in the banking and insurance sectors and from analysts on how the information is understood and used; an explanation of preliminary IASB and EFRAG positions; and a question and answer session.

April 2014

On April 17, 2014, the IASB issued for public comment a Discussion Paper (DP) exploring an approach to better reflect entities’ dynamic risk management activities in their financial statements, otherwise known as macro hedging.

 

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.