The Board previously concluded that additional guidance is required regarding what can be designated as a hedged portion under IAS 39. IAS 39 permits an entity to hedge all cash flows of a financial instrument for one or more specific risks, but does not specify what risks are eligible for hedge accounting. The Board therefore addressed two issues at the December meeting:

• The first issue was whether IAS 39 should be amended to specify risks that are eligible to be designated for hedge accounting.
• The second issue was, since IAS 39 permits 'other portions' of the future cash flows on a financial instrument for its whole life or part of its time period to maturity to be designated as a hedged item, should the Board amend IAS 39 to clarify which specific 'other portions' of a financial instrument that are eligible for designation as a hedged item.

On the first issue the Board decided that IAS 39 should be amended to specify those risks which are eligible for designation as a hedged item.

On the second issue the Board voted and agreed to specify which 'other portions' of a financial instrument that would be permitted for designation as a hedged portion under IAS 39.

The Board also decided that these amendments should be developed directly through the Board as a stand-alone amendment to IAS 39.