IASB publishes Discussion Paper on accounting for macro hedging
17 April 2014
The International Accounting Standards Board (IASB) today published for public comment a Discussion Paper exploring an approach to better reflect entities' dynamic risk management activities in their financial statements, otherwise known as macro hedging.
Many financial institutions and other entities manage risks, such as interest rate risk, dynamically on a portfolio basis rather than on an individual contract basis. Dynamic risk management is a continuous process because the risks that such entities face evolve over time, as does their approach to managing those risks. However, the existing accounting requirements of IAS 39 Financial Instruments are generally considered to be difficult to apply when accounting for such transactions.