Practical guide on general hedge accounting Dec 2013 | Page 26

Practical guide

7. Disclosures
Like many other new standards, the disclosure requirements are extended. The outreach activities undertaken
by the Board found that users considered that the disclosure requirements in IFRS 7 did not provide sufficient
information. As a result, the Board has amended the disclosure requirements in IFRS 7.
The disclosures are required for each ‘category of risk’ that an entity decides to hedge (for example, interest rate
risk, foreign currency risk or commodity price risk). IFRS 9 does not prescribe the risk categories to be used. An
entity should apply judgement and categorise risks on the basis of how it manages its risks through hedging.
However, an entity should apply its risk categories consistently throughout the entire hedge
accounting disclosures.
The required hedge accounting disclosures provide information about:


An entity’s risk management strategy and how it is applied to manage risk;



How the entity’s hedging activities might affect the amount, timing and uncertainty of its future cash flows;



The effect that hedge accounting has had on the entity’s financial statements; and



Whether the entity is applying the option to designate a credit exposure as measured at fair value
through P&L.

The disclosure requirements for each of these four areas are very detailed. Entities should start early to gather
and prepare all the necessary information.
The above mentioned disclosures will be applicable, even if the entity continues to apply IAS 39.

General hedge accounting

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