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FRC makes amendments to FRS 102

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19 Dec 2019

The Financial Reporting Council (FRC) has issued 'Amendments to FRS 102 – Interest rate benchmark reform'.

The amendments, which were consulted on within Financial Reporting Exposure Draft (FRED 72) - Draft amendments to FRS 102 - Interest rate benchmark reform, respond to a current financial reporting issue.

Interest rate benchmarks such as the London Interbank Offered Rate (LIBOR) are being reformed, and it is anticipated that LIBOR will not be available after 2021.  There is increasing uncertainty about the long-term viability of some interest rate benchmarks and this gives rise to issues affecting financial reporting in the period before the reform, particularly in relation to hedge accounting.

The amendments to specific hedge accounting requirements in Section 12 of FRS 102 provide relief that will avoid unnecessary discontinuation of hedge accounting as interest rate benchmarks are reformed.   Entities will apply specific hedge accounting requirements assuming that the interest rate benchmark relevant to the hedge accounting is not altered as a result of interest rate benchmark reform.

The amendments are effective for accounting periods beginning on or after 1 January 2020, with early application permitted.

A press release and the amendments are available on the FRC website.  Our related Need to know publication is available here.  Draft amendments to FRS 102 – Interest rate benchmark reformDraft amendments to FRS 102 – Interest rate benchmark reform f, ferfer

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