Trésorier/Treasurer magazine - N°86 - Jul/Aug/Sep 2014 - (Page 68)

LE MAGAZINE DU TRESORIER / TREASURER MAGAZINE - N°86 - JUL / AUG / SEP 2014 IFRS CORNER 68 The IAS has published a DP exploring an approach in order to better reflect the companies' "dynamic risk management" activities in the financial statements, otherwise known as macro hedging. Actually, many companies manage risks, such as interest rates, with a dynamic manner, on a portfolio basis rather than on an individual contract basis. What is a Dynamic Risk Management approach? It is a continuous process because the risks the preparers face evolve overtime. Under current IAS 39, it is generally considered to be difficult to apply when accounting as for such type of transactions, which would require a more dynamic approach. After the crisis, IASB has decided to replace IAS39 by IFRS9, the new standard for financial instruments. This long-awaited standard is in its final stage of completion. It was decided couple of months ago that the IASB will treat the macro-hedging component as a separate project, in order to avoid an even broader range of constituents. This new DP represents a first step of the project and is aimed at collecting comments from users and preparers on the possible approach to accounting for an entity's dynamic risk management activities, the Portfolio Revaluation Approach (PRA). The PRA could be defined in four main points: 1. The exposures risk-managed dynamically would be revalued for changes in the managed risk through the P&L account 2. Fair Value (FV) changes arising from these risk management instruments used to manage this type of risks would also be recognized into P&L account 3. The success (or failure) of a preparer's dynamic approach would be then captured by the net effect of the measurement of 1 and 2, both booked into P&L 4. FV of risk exposures that are dynamically managed is not required - IASB, published in April 2014 a Discussion Paper on Accounting for Macro Hedging IFRS also requires the needs for preparers to provide users with a more comprehensive set of disclosures to (better) define the dynamic risk management activities covered. Current solution was not satisfactory and could have implied more complexity on operations. The idea is to better represent and reflect the economics of such an approach. The DP is available for comments until 17th of October 2014. We have time to prepare answers and comments. If we compare to IFRS 9 extremely long completion process, this new guidance or standard present an obvious risk of taking time to be finalised and applied. It will be a complicate set of measures to set up (as always with financial instruments accounting provisions). We hope it will solve a major issue raised by preparers before January 2001, when IAS 39 was first applied. After comments, this DP will be potentially followed by an ED in the coming months. François Masquelier Chairman of ATEL

Table des matières de la publication Trésorier/Treasurer magazine - N°86 - Jul/Aug/Sep 2014

Couverture
SOMMAIRE
EDITORIAL
FINANCIAL HIGHLIGHTS Luxembourg Tax News
INTERVIEW David Holland
FOCUS
FORUM
CORPORATE FINANCE
15 MINUTES WITH INTIX
THE FINANCIAL RISK OBSERVATORY
NEWS

Trésorier/Treasurer magazine - N°86 - Jul/Aug/Sep 2014