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Deloitte comment letter on tentative agenda decision on IFRS 9 — Fair value hedge of foreign currency risk on non-financial assets

Published on: 20 Aug 2019

We have commented on the IFRS Interpretations Committee's publication in the June 2019 IFRIC Update of the tentative decision not to take onto the Committee's agenda the request for clarification on fair value hedge accounting for foreign currency risk on non-financial assets.

We agree with the IFRS Interpretations Committee’s decision not to add this item onto its agenda for the reasons set out in the tentative agenda decision. However, we have some concerns with the articulation of the agenda decision in the case where an entity is intending to consume the non-financial item. We believe there are three main questions to be addressed:

  • Can an entity have exposure to foreign currency risk on a non-financial asset held for consumption that could affect profit or loss?
  • If an entity has exposure to foreign currency risk on a non-financial asset, is it a separately identifiable and reliably measurable risk component?
  • Can the designation of foreign currency risk on a non-financial asset held for consumption be consistent with an entity’s risk management activities?

Download the full comment letter below.


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