Financial Instruments – Hedge Accounting

BACKGROUND

The Accounting Standards Board (AcSB) is participating in the third phase of the International Accounting Standards Board’s (IASB) multi-phased project, IFRS 9:  Financial Instruments (replacement of IAS 39), to improve the usefulness of financial statements for users by simplifying the classification and measurement requirements for financial instruments.

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The objective of the third phase is to specifically improve the usefulness of financial statements for users by fundamentally reconsidering the current hedge accounting requirements.

The AcSB participates in the consultations and activities on this project to ensure that Canadian entities’ financial reporting needs are considered by the IASB. The AcSB plans to incorporate the final new standard into Part I of the Handbook in accordance with its strategy of adopting International Financial Reporting Standards (IFRSs) for publicly accountable enterprises.

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PROJECT NEWS

AcSB Decision Summary – December 3, 2013
The AcSB decided, subject to a written ballot, to incorporate into Part I of the CPA Canada Handbook – Accounting amendments to the accounting for financial instruments issued by the IASB in November 2013. In addition to introducing guidance on hedge accounting, IFRS 9 Financial Instruments (Hedge Accounting and amendments to IFRS 9, IFRS 7 and IAS 39), among other things, temporarily removes the mandatory effective date of IFRS 9 while continuing to make it available for earlier application. 

Newly issued or amended IFRSs are not immediately part of Canadian GAAP and, therefore, are not available for earlier application until they have been issued in the Handbook. That occurs once the AcSB’s necessary due process, translation and publication processes have been completed (see the Introduction to Part I, as well as the 2012 AcSB Staff Financial Reporting Commentary, “Newly Issued IFRSs: Early Adoption and Advance Disclosure Issues”).

In the case of IFRS 9, as amended in November 2013, the guidance on hedge accounting and other amendments are expected to be issued and become part of Canadian GAAP in the first quarter of 2014.

Final Amendments – Hedge Accounting
November 22, 2013. The IASB has issued IFRS 9 Financial Instruments (Hedge Accounting and amendments to IFRS 9, IFRS 7 and IAS 39). The amendments introduce a new hedge accounting model, allow IFRS 9’s “own credit” requirements to be applied in isolation, and temporarily remove its mandatory effective date while making it available for application.

Staff Draft – Hedge Accounting
September 12, 2012. The IASB has issued a draft of the forthcoming general hedge accounting requirements to be added to IFRS 9 Financial Instruments. The requirements will align hedge accounting more closely with risk management. The draft is being made available for information purposes to enable stakeholders to familiarize themselves with the document.

AcSB Response – Hedge Accounting
April 25, 2011. The AcSB has submitted a comment letter responding to the FASB’s Discussion Paper. 

AcSB Decision Summary – April 13, 2011
The AcSB decided on the key issues that will be addressed in its response letter to the U.S. Financial Accounting Standards Board on its Discussion Paper, "Selected Issues about Hedge Accounting."

AcSB Decision Summary – March 22-23, 2011
The AcSB decided to respond to the U.S. Financial Accounting Standards Board’s invitation to comment on its Discussion Paper, “Selected Issues about Hedge Accounting.”

AcSB Response – Hedge Accounting
March 21, 2011. The AcSB has submitted a comment letter responding to the IASB’s Exposure Draft.

AcSB Decision Summary – February 16, 2011
The AcSB continued its discussion of the key issues to be included in its response letter on the IASB's Exposure Draft, “Hedge Accounting.”  No decisions were made.

AcSB Decision Summary – February 16, 2011
The AcSB approved the issuance of an exposure draft reflecting the proposals in the IASB Exposure Draft, “Hedge Accounting.”

Exposure Draft – Financial Instruments: Hedge Accounting
February 10, 2011.  The AcSB has issued an Exposure Draft that corresponds to the IASB’s ED on this topic.  Comments, on the form provided, are requested by March 9, 2011.

Roundtable – Hedge Accounting
February 9, 2011. Attend a roundtable on Monday, February 28, 2011, to share your views on the non-financial hedging proposals in the IASB’s Exposure Draft.

AcSB Decision Summary – January 12, 2011
The AcSB approved a plan to respond to the IASB’s Exposure Draft on Hedge Accounting.

Exposure Draft – Financial Instruments: Hedge Accounting
December 13, 2010. The IASB has issued an Exposure Draft proposing a principle-based model for accounting for hedging activities that will enable companies to reflect their risk management activities better in their financial statements.  The comment deadline is March 9, 2011. 

AcSB Decision Summary – September 7-8, 2010
The AcSB approved a comment letter to the US Financial Accounting Standards Board (FASB) on its Exposure Draft, “Accounting for Financial Instruments and Revisions to the Accounting for Derivative Instruments and Hedging Activities.”

AcSB Decision Summary – July 14, 2010
The AcSB discussed the development of a response to the FASB Exposure Draft, “Accounting for financial Instruments and Revisions to the Accounting for Derivative Instruments and Hedging Activities”.  No decisions were made.

AcSB Decision Summary – April 9, 2010
The AcSB agreed to issue an exposure draft on hedge accounting when issued by the IASB. This document is expected to be issued during the second quarter of 2010.

AcSB Staff Response – Reducing Complexity in Reporting Financial Instruments
September 19, 2008. The AcSB staff has submitted a letter commenting on the IASB's discussion paper.

Discussion Paper – Reducing Complexity in Reporting Financial Instruments
April 16, 2008 The IASB has issued a Discussion Paper that examines the main causes for the complexity under IFRSs today and proposes possible intermediate and long-term approaches to improve and simplify measurement. The comment deadline is September 19, 2008.

 

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.