IFRS to Discuss Phase II of IBOR Reform at July Meeting of ASAF

In May 2019, the Board had, in the context of IBOR reform and its effects on financial reporting, published an exposure draft that proposed amendments to IFRS 9 on financial instruments and IAS 39 on recognition and measurement of financial instruments to provide relief from specific hedge accounting requirements. The Board decided to address these issues in Phase I because they may affect financial reporting before the reform is enacted. Other potential accounting issues will be addressed in Phase II. At the time of the discussions leading to the exposure draft, the Board noted that a range of issues could arise at different points in time due to the uneven timing of the replacement coupled with different approaches to replacement and different interest rate benchmarks being considered in different markets. These issues would be addressed during Phase II.

While the specific conditions and details of the reform have yet to be finalized, the staff started considering the potential accounting issues that could affect financial reporting when an existing interest rate benchmark is replaced with an alternative interest rate. The objective of Phase II is to assess the potential accounting implications of the reform, which were not considered in Phase I, and determine whether the Board should take further action.

Keywords: International, Accounting, Banking, IFRS 9, IAS 39, Financial Instruments, Hedge Accounting, IBOR, Reporting, Phase II, Interest Rate Benchmark, ASAF, IFRS