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IFRS

IFRS 9 hedge accounting

Andrew Watchman

IAS 39 ‘Financial Instruments: Recognition and Measurement’, the previous Standard that dealt with hedge accounting, was heavily criticised for containing complex rules which either made it impossible for entities to use hedge accounting or, in some cases, simply put them off doing so.


We therefore welcome the publication of IFRS 9’s requirements on hedge accounting. The new requirements should make it easier for many entities to reflect their actual risk management activities in their hedge accounting and thus reduce profit or loss volatility.


At the same time, entities should be aware that while it will be easier to qualify for hedge accounting, many of the existing complexities associated with it (measuring hedge ineffectiveness, etc) will continue to apply once entities are using it.”

Andrew Watchman, Global Head – IFRS, +44 (0)20 7391 9510