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Deloitte comments on IFRIC tentative agenda decisions

  • Deloitte Comment Letter Image

23 Oct 2006

At each of its meetings, the International Financial Reporting Interpretations Committee considers recommendations of its Agenda Committee about potential IFRIC agenda topics.

When the IFRIC initially decides Not to Put a Topic on its Agenda, they report that tentative decision in the IFRIC Update newsletter and invite comments before making a final agenda decision. In September 2006, Deloitte adopted a policy of providing written comments to the IFRIC on all tentative agenda decisions. We will post on IAS Plus those Deloitte letters considered particularly significant, including those on which we disagree on a matter of principle. We recently submitted five letters to the IFRIC in response to their September 2006 tentative agenda decisions, and we believe that the following letter deals with a significant matter of principle: IAS 39 – Testing of hedge effectiveness on a cumulative basis (PDF 122k). An excerpt:

We support the IFRIC's decision not to take this item onto the agenda as IAS 39 is clear. We believe the rejection wording could be clearer in differentiating between assessment of hedge effectiveness (for the purposes of determining whether the hedge is 'highly effective' in accordance with IAS 39.88(e)) and measurement of effectiveness (for the purposes of determining the amount of hedge ineffectiveness to be recognised in profit or loss). Differentiating between assessment and measurement is the crux of this issue. We have proposed an amendment to the rejection wording included in the Appendix to make this clear.

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