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August 23, 2019

IASB to hold further meeting on IBOR reform

The IASB is holding an additional meeting on 28 August to discuss feedback received on ED/2019/1 'Interest Rate Benchmark Reform (Proposed amendments to IFRS 9 and IAS 39)'.  Ahead of the meeting, papers have been released regarding ‘redeliberation’ of the proposed amendments to IFRS 9 and IAS 39.

The staff recommendations stipulate that:

  • IAS 39 should be amended to provide an exception for the retrospective assessment, so that an entity would continue to apply hedge accounting to a hedging relationship for which effectiveness is outside of the 80– 125% range during the period of uncertainty arising from the reform.
  • For ‘macro hedges’ designated under either IFRS 9 or IAS 39, an entity should assess whether a non-contractually specified risk component is separately identifiable only at the time the hedged item is initially designated in the ‘macro hedge’. Once a hedged item is designated within a ‘macro hedge’, the separately identifiable requirement should not be reassessed for that same hedged item at subsequent redesignations.
  • The final amendments should clarify that, when an entity designates a group of items as the hedged item in accordance with paragraph 6.6.1 of IFRS 9 or paragraph 83 of IAS 39, the end of application requirement proposed in the ED should apply to each individual item within the designated group of items.
  • The scope of the proposed exceptions should be clarified so that the exceptions only apply to those hedging relationships that are directly affected by uncertainties about the timing and/or amount of interest rate benchmark-based cash flows of the hedged item and/or hedging instrument arising from the reform.
  • The disclose requirements accompanying the exceptions proposed in the ED should be reduced to some specific disclosures and an exemption should be provided from the disclosure requirements in paragraph 28(f) of IAS 8 upon the initial application of the amendments.

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