In January 2013 the IASB discussed issues that had arisen on the draft of the forthcoming hedge accounting requirements. During that meeting the IASB discussed the scope of the draft requirements and the interaction with macro hedging activities, and requested that the staff should seek further analysis and comment about how an election to apply IAS 39 instead of the new hedge accounting model might be designed and the consequences that might have before finalisation of the requirements.
At this meeting, the IASB finalised its deliberations on hedge accounting, addressing:
a. scope and interaction with macro hedging activities (Paper 13A);
b. compliance with due process (Paper 13B); and
c. re-exposure and permission to draft (Paper 13C).
Paper 13A: Scope and interaction with macro hedging activities
The IASB discussed whether it should provide a scope exception to the new hedge accounting requirements that will become part of IFRS 9 Financial Instruments to address interaction with ‘macro hedging’ activities. This would be an exception in addition to that already included in the draft hedge accounting requirements for a fair value hedge of the interest rate exposure of a portfolio of financial assets or financial liabilities, and would extend the option to apply the hedge accounting requirements in IAS 39 Financial Instruments: Recognition and Measurement to ‘macro cash flow hedging’. The IASB considered whether there was a need for allowing entities to continue to apply IAS 39 to these cash flow hedges. In the IASB’s view it was not necessary to make any changes other than the clarifications it had tentatively agreed on at its January meeting. However, the IASB acknowledged that it had not yet completed its project on accounting for macro hedging and that providing a choice to continue to apply IAS 39 would allow entities to wait for the complete final picture related to hedging activities before applying a new hedge accounting model.
The IASB decided to provide entities with an accounting policy choice between applying the new hedge accounting requirements of IFRS 9 and retaining the existing requirements in IAS 39. It was noted that the accounting for fair value hedges of the interest rate exposure of a portfolio of financial assets or financial liabilities in IAS 39 would still be available to those who apply the new IFRS 9 hedge accounting model (as originally proposed). The IASB also emphasised that the new hedge accounting related disclosure requirements will become part of IFRS 7 Financial Instruments: Disclosures and would consequently apply to all entities applying hedge accounting under IFRSs (even if electing to continue to apply IAS 39 for hedge accounting).
Ten IASB members agreed and one abstained.
Paper 13B: Due process summary for the hedge accounting project
The IASB discussed whether due process requirements had been met during the course of the hedge accounting project. The IASB members agreed with the staff’s view that due process requirements had been met.
Thirteen IASB members agreed.
Paper 13C: Re-exposure and permission to draft
In September 2011 the IASB decided that re-exposure of hedge accounting would not be necessary. The question was therefore whether the changes proposed to the final document as a result of issues raised during the fatal flaw process warranted the IASB changing its prior decision. The IASB decided that re-exposure was unnecessary.
Twelve IASB members agreed.
The IASB proceeded to consider whether to grant the staff the permission to proceed to drafting the Ballot Draft of the new version of IFRS 9, incorporating the final version of Chapter 6 Hedge Accounting. The IASB granted permission to draft.
Thirteen IASB members agreed.
Three IASB members noted that they were considering dissenting from the new hedge accounting requirements.
The staff will proceed to draft the Ballot Draft of the new version of IFRS 9, incorporating the final version of Chapter 6 Hedge Accounting.