Financial Risk Disclosures and Other Amendments to Financial Instruments Disclosure

Date recorded:

The Board was presented with:

  • A draft IFRS: Financial Risk Disclosures.
  • A draft Basis for Conclusions for the draft IFRS.
  • Draft Implementation Guidance for the draft IFRS.
  • A draft Amendment to IAS 1 that contains a capital disclosure requirement.
  • Draft Amendments to IAS 32 that includes additional balance sheet and income statement disclosure requirements.
  • A draft memo summarising suggested changes to IAS 30 as part of IAS 32.

IFRS on financial risk disclosures

The Board agreed that a preparer could not apply the draft interpretation without reference to the draft implementation guidance and basis for conclusions. Therefore, the Board requested sections of these to be included in the Standard.

The Board agreed that the scope should be the same than IAS 32.

The Board agreed with the following decisions FAAC made and to include them in the Standard:

(1) There should be a disclosure requirement for information about 'other' risks (eg residual value risk) that underlie financial instruments. By including this requirement the FAAC acknowledged that there are instances when an entity is exposed to other risks associated with financial instruments that warrant disclosure.

(2) For credit risk - To include a requirement for disclosing information about collateral taken. Ie this information is useful because it provides information about the frequency of such activities and the entity's ability to obtain and dispose of the collateral.

(3) For interest rate risk - To add 'Interest Rate Risk' as a risk disclosure category and to include in this disclosure requirement both (1) cash flow interest rate risk and (2) fair value interest rate risk. The FAAC concluded, that unlike IAS 32, it would not distinguish between the two because this distinction is an accounting convention. In practice, for the purpose of financial risk management no distinction is made.

(4) For market risk - There should be a minimum requirement to disclose further information, such as significant terms and conditions, when the sensitivity analysis disclosure is unrepresentative of the risk inherent in a financial instrument. An example may be where an instrument contains significant optionality that is not revealed by the sensitivity analysis.

(5) For market risk - There should be a requirement to disclose asset quality as it relates to market risk. For example, the size of an entity's holding of a specific equity security impacts the quality of the financial asset (ie the value of the entity's equity holdings, its ability to dispose of them quickly).

Draft implementation guidance

The Board agreed with the recommendation not to add supplementary implementation guidance.

Draft amendment to IAS 1 that incorporates a capital disclosure requirement

The Board asked the Staff to find another term than "industry-wide capital requirements"

The Board decided not to add 'shall be provided to the extent it is not prohibited by law' to the capital disclosure requirement.

The Board agreed to add an illustrative example of capital disclosure requirements.

Draft amendments to IAS 32 that includes additional balance sheet and income statement disclosure requirements

The Board agreed with the following balance sheet and income statement disclosure principle: "An entity shall disclose information that enables users of its financial statements to evaluate the significance of financial instruments to an entity's financial position and performance."


The Board agreed on the proposed timetable.

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