In publishing the definitive version of the hedging provisions of IFRS 9, Financial instruments, the IASB had already taken a major step towards revising the accounting treatment of entities’ risk management activities.
The publication in April of the Discussion Paper on macro-hedging represents new progress in this area. The IASB proposes to extend the scope of hedge accounting to dynamic risk management as it is practiced by financial institutions in their asset/liability management.
While its examples tend to be drawn from interest rate risk management in financial institutions, the Discussion Paper also addresses the issues faced by industrial and service entities. The IASB invites stakeholders to submit practical examples of risk management to which an accounting approach to macro hedging would be relevant.
In this edition, Beyond the GAAP introduces the essence of this paper in 20 Q&A.