Tentative agenda decision—Application of the Highly Probable Requirement in a Cash Flow Hedge Relationship (IFRS 9)


The IFRS Interpretations Committee tentatively decided not to add this matter to its standard-setting agenda at its meeting in March 2018. The Committee will reconsider the following tentative agenda decision, including the reasons for not adding the matter to the standard-setting agenda, at a future meeting. The Committee encourages interested parties to submit their responses using the link below.

Tentative agenda decision

The Committee received a request regarding the requirement in IFRS 9 and IAS 39 that a forecast transaction must be ‘highly probable’ in order to qualify as a hedged item in a cash flow hedge relationship. The request asked how an entity applies that requirement when the notional amount of the derivative designated as a hedging instrument (‘Load Following Swap’) varies depending on the outcome of the hedged item. In addition, the request asked whether, when assessing or measuring hedge effectiveness, the hedged item must be fixed (in volume terms) at the inception of the hedging relationship, and whether the answers to these questions depend on whether the entity applies IAS 39 or IFRS 9.

On the basis of the responses to outreach performed on the request, the Committee observed that the financial instrument described in the request is not common. Therefore, the Committee has not obtained evidence that the matter has widespread effect.

Consequently, the Committee [decided] not to add this matter to its standard-setting agenda.

Deadline for submitting comment letters: 22 May 2018


Comment letters are public and all comment letters received on the due process document can be accessed below.

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