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EFRAG issues feedback statement on general hedge accounting and macro hedge accounting practices

  • EFRAG (European Financial Reporting Advisory Group) (dk green) Image

24 Jul 2013

The European Financial Reporting Advisory Group (EFRAG) has published a feedback statement summarising how the results of the field test conducted on the IASB’s IFRS 9 Hedge Accounting Review Draft were used to inform the basis of two letters to the IASB – one specifically on the issues identified with the Review Draft and the other on the impact of the Review Draft on existing macro hedge relationships under IAS 39.

In September 2012 the International Accounting Standards Board (IASB) published on its website a staff draft of the general hedge accounting section of IFRS 9 'Financial Instruments', the requirements of which will be added to IFRS 9 Financial Instruments.  The purpose of a staff draft was to illustrate the IASB's position while at the same time enabling constituents to familiarise themselves with the document.

Field testing was conducted on the Review Draft by EFRAG in conjunction with the ASCG, together with the UK Financial Reporting Council, Autorité des Normes Comptables (ANC) and Organismo Italiano di Contabilità (OIC).  Based on the results of the field test a letter was sent to the IASB in January 2013 providing an overview of the implementation difficulties including fatal flaws and requests for additional guidance.

Many participants reported that it was unclear whether the requirements in the Review Draft would change the way they deal with macro hedge relationships.  To address these concerns EFRAG conducted further outreach and then published a draft comment letter on the impact of the Review Draft on existing macro hedge relationships under IAS 39 in January 2013.  A final comment letter was published in March 2013.

The feedback statement summarises the constituent’s comments from the field test, highlights the flaws that were identified in the Review Draft and indicates how these comments were considered by EFRAG in forming their comment letter to the IASB on the results of the field test  The feedback statement also provides an analysis of the EFRAG tentative position expressed in the draft comment letter on the impact of the Reciew Draft on existing macro hedging relationships under IAS 39 , describes the comments received from constituents and then highlight how these comments were considered by EFRAG in reaching their final position set out in their final comment letter to the International Accounting Standards Board (IASB). 

Click for:

EFRAG press release (link to EFRAG website)

Feedback statement in full (link to EFRAG website)

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