IFRS published agenda papers for the Accounting Standards Advisory Forum (ASAF) meeting to be held on July 11–12, 2019. One of the objectives of the meeting is to gather feedback from the ASAF members on potential accounting issues that should be considered by the Board during Phase II of the interbank offered rate (IBOR) reform and its effects on financial reporting project. The staff has asked the ASAF members to reach out to stakeholders in advance of the July 2019 ASAF meeting to help identify the relevant potential accounting issues.
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
Scott is a Director in the Regulatory and Accounting Solutions team responsible for providing accounting expertise across solutions, products, and services offered by Moody’s Analytics in the US. He has over 15 years of experience leading auditing, consulting and accounting policy initiatives for financial institutions.
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