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Need to know — FRC proposes hedge accounting amendments to FRS 102

Published on: 15 Nov 2013

This publication from Deloitte discusses the hedge accounting amendments to FRS 102 proposed by the Financial Reporting Council (FRC) with the issuance of FRED 51 'Amendments to FRS 102: The Financial Reporting Standard applicable in the UK and Republic of Ireland: Hedge Accounting'. 

The amendments:

  • Propose to replace the restrictive hedge accounting requirements in FRS 102 with a set of hedge accounting principles based on the International Accounting Standards Board’s draft IFRS 9 Financial Instruments hedge accounting model.
  • Would allow more opportunities to apply hedge accounting, reducing profit or loss volatility from hedging instruments such as interest rate swaps, FX forwards and option contracts recognised and measured at fair value.
  • Introduce less onerous criteria for qualifying for hedge accounting than those in FRS 102 and the proposed IFRS 9 hedge accounting model.

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