Accounting for Dynamic Risk Management: a Portfolio Revaluation Approach to Macro Hedging
|Current Status||Next Steps|
IASB is deliberating comments received on its Discussion Paper.
Second half of 2017 – IASB to issue a second discussion paper.
The Accounting Standards Board (AcSB) is participating in the International Accounting Standards Board’s (IASB) project to explore an approach to account for an entity’s dynamic risk management activities.
The objective of this project is to develop an approach that:
- better reflects entities’ dynamic risk management activities in their financial statements; and
- enhances the usefulness of the financial information to help users of financial statements to better understand such activities.
Operational feasibility is also one of the considerations being evaluated when exploring an accounting approach for dynamic risk management.
The model focuses on interest rate risk, particularly as managed by banks however, the approach is intended to be applicable to the dynamic management of risks arising from both financial and non-financial items.
The AcSB’s due process includes ensuring that Canadian entities’ financial reporting needs are considered by the IASB and issuing the AcSB’s own exposure draft on each IASB proposal. Subject to the responses to the AcSB’s exposure draft on whether the IASB’s proposals are appropriate for application in Canada, the AcSB expects that the amendments will be incorporated into Canadian GAAP in accordance with the AcSB’s strategy of adopting IFRSs for publicly accountable enterprises.
PROJECT NEWS & DECISION SUMMARIES
Discussion Paper – Accounting for Dynamic Risk Management: a Portfolio Revaluation Approach to Macro Hedging – April 2014
On October 17, 2014, the AcSB submitted a comment letter responding to the IASB’s Discussion Paper issued in April 2014. The letter is generally supportive of creating a standard that reflects the dynamic risk management activities that occur within an entity. The letter discusses the feedback received from stakeholders on their three main concerns including scope, behavioural characteristics and whether the standard should be made mandatory or optional. Read the AcSB letter posted by the IASB.
AcSB Decision Summary – October 15, 2014
The AcSB discussed the feedback obtained from the outreach activities with Canadian stakeholders on the IASB Discussion Paper, “Accounting for Dynamic Risk Management: a Portfolio Revaluation Approach to Macro Hedging.” The outreach activities consisted of consultations among Canadian stakeholders, an IASB member and staff, and the AcSB Chair and staff. Discussions also occurred at various AcSB committee meetings.
The AcSB approved its response letter to the IASB Discussion Paper.
AcSB Decision Summary – June 17, 2014
The AcSB staff presented an educational session on the IASB Discussion Paper, “Accounting for Dynamic Risk Management: a Portfolio Revaluation Approach to Macro Hedging.” At its May 2014 meeting, the AcSB approved a plan to respond to the Discussion Paper.
AcSB Decision Summary – May 14-15, 2014
The AcSB approved a plan to respond to the IASB’s Discussion Paper on this topic. This plan includes undertaking targeted outreach with Canadian stakeholders who might manage exposures to market price movements on a dynamic basis, and consulting with the AcSB’s User Advisory Council.
Canadian stakeholders are encouraged to submit their comments directly to the IASB by October 17, 2014.
IASB Discussion Paper – Accounting for Dynamic Risk Management: A Portfolio Revaluation Approach to Macro Hedging
April 23, 2014. The IASB has issued a Discussion Paper exploring an approach to account for an entity’s dynamic risk management activities. Canadian stakeholders are encouraged to submit their comments to the IASB by October 17, 2014.
Disclaimer: This project summary has been prepared for information purposes only. Decisions reported are tentative and reflect only the current status of discussions on this project, which may change after further Board deliberations. Decisions to publish Handbook material are final only after a formal ballot process.