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
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