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Hedge accounting under IFRS 9 Financial Instruments
The new hedge accounting model aims to link an entity’s risk management strategy and hedging rationale and their impact on financial statements.
On 19 November 2013 the International Accounting Standards Board (IASB) issued a new version of IFRS 9 Financial Instruments (Hedge Accounting and amendments to IFRS 9, IFRS 7 and IAS 39) (IFRS 9 (2013)), which primarily introduces the new hedge accounting requirements.
The high-level aim of the new hedge accounting model is to provide useful information about risk management activities that use financial instruments, with the effect that financial reporting will reflect more accurately how an entity manages its risk and the extent to which hedging mitigates those risks. Specifically, the new model aims to provide a better link between an entity’s risk management strategy, the rationale for hedging and the impact of hedging on the financial statements.