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Financial instruments — General hedge accounting

Background

This project forms part of the IASB's comprehensive project on financial instruments. The existing hedge accounting requirements in IAS 39, Financial Instruments: Recognition and Measurement, are often considered by users and preparers of financial statements to be complex and not reflective of an entity’s risk management activities, nor to what extent those activities are successful in meeting the entity's risk management objectives. Many also find the requirements in IAS 39 excessively rule-based, resulting in arbitrary outcomes.

The project involves a comprehensive review of hedge accounting requirements, to establish a more objective-based approach to hedge accounting and align it with an entity's risk management processes.

This project is split into two phases: general hedge accounting (discussed on this page) and macro hedge accounting (see our separate project page).

The FASB attended meetings with the IASB as they deliberated the IASB's proposed hedge accounting model. With the issuance of the IASB final standard in November 2013, the FASB decided to initiate a research project to determine what steps it should take concerning hedge accounting.

 

Meeting minutes

  • May 2, 2012 — Education session on the major themes that emerged through outreach efforts with financial statement users regarding derivatives and hedge accounting.
  • November 30, 2011 — Education session on the IASB's hedge accounting model, presented by the IASB.
  • August 24, 2011 — The Board discussed comments received on the Invitation to Comment, Selected Issues About Hedge Accounting.
  • March 16, 2011 — The boards discussed feedback received on the IASB's exposure draft.

Deloitte Observer meeting notes on the hedge accounting project are available on the Global IAS Plus Web site.

 

Current status of the project

The IASB has completed its project with the issuance of IFRS 9, Financial Instruments (Hedge Accounting and amendments to IFRS 9, IFRS 7 and IAS 39), on November 19, 2013.

The FASB has started a research project to determine what its next steps should be.

 

Project milestones

DateDevelopmentComments
March 2008 Discussion Paper, Reducing Complexity in Reporting Financial Instruments, published by the FASB and IASB. Comment deadline September 19, 2008.
June 6, 2008 Proposed Accounting Standards Update (ASU), Accounting for Hedging Activities, published by the FASB.
Comment deadline August 15, 2008.
May 26, 2010 Proposed ASU, Accounting for Financial Instruments and Revisions to the Accounting for Derivative Instruments and Hedging Activities — Financial Instruments (Topic 825) and Derivatives and Hedging (Topic 815), published by the FASB.
Comment deadline September 30, 2010.
December 9, 2010 Exposure Draft ED/2010/13, Hedge Accounting, published by the IASB. Comment deadline March 9, 2011.
February 9, 2011 Discussion Paper, Invitation to Comment — Selected Issues about Hedge Accounting, published by the FASB. Comment deadline April 25, 2011.
September 7, 2012 "Review draft" of the hedge accounting section of IFRS 9 published by the IASB. Finalized requirements expected in the fourth quarter of 2012.*
November 19, 2013 IFRS 9 Financial Instruments (Hedge Accounting and amendments to IFRS 9, IFRS 7 and IAS 39). The amendment removed the mandatory effective date for IFRS 9 which will be set once the standard is complete with a new impairment model and finalisation of any limited amendments to classification and measurement.

* Originally forecast date, subsequently amended.

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