Practical guide on general hedge accounting Dec 2013 | Page 4
Practical guide
The reason for addressing such hedges separately is that hedges of open portfolios introduce additional
complexity. Risk management strategies tend to have a time horizon over which an exposure is hedged; so, as
time passes, new exposures are continuously added to such hedged portfolios, and other exposures are removed
from them.
The Board expects to issue a discussion paper on macro hedges in the first quarter of 2014, with a comment
period of 180 days.
PwC insight:
This scope exception is not applicable when hedging closed portfolios. IFRS 9 addresses the accounting for
hedges of closed portfolios or groups of items that constitute a gross or net position (refer to section 5 below
for further details).
It is expected that the macro hedging project will be relevant for financial institutions, but also for corporates,
since the Board intends to broaden the scope to consider other than fair value macro hedges of interest rate
risk (for example, macro hedges of commodity price risk).
1.2.2. Accounting policy choice
IFRS 9 provides an accounting policy choice: entities can either continue to apply the hedge accounting
requirements of IAS 39 until the macro hedging project is finalised (see above), or they can apply IFRS 9 (with
the scope exception only for fair value macro hedges of interest rate risk). This accounting policy choice will
apply to all hedge accounting and cannot be made on a hedge-by-hedge basis.
PwC insight:
This accounting policy choice refers to the application of the hedge accounting only, and has no impact on the
implementation of the other two phases of IFRS 9 (that are, ‘classification and measurement’
and ‘impairment’).
If an entity initially decides to continue applying IAS 39 hedge accounting, it can subsequently decide to
change its accounting policy and commence applying the hedge accounting requirements of IFRS 9 at the
beginning of any reporting period (subject to the other transition requirements of IFRS 9).
Whichever accounting requirements are applied (that is, IAS 39 or IFRS 9), the new hedge accounting
disclosure requirements in IFRS 7 will be applicable.
General hedge accounting
PwC 2