Deloitte comments on the IASB’s macro hedging accounting discussion paper
17 April 2014
Andrew Spooner, financial instruments lead partner, said:
“The discussion paper purposely asks more questions than the IASB has answers for. It is the start of what will be a long journey to solve the ongoing debate as to how to best account for banks’ macro hedging of interest rates. To date, the accounting standards have tried to accommodate macro hedging activities, but not to everyone’s satisfaction. This is a fearsomely complex area of accounting. But, that is no reason why efforts should not be made to reset the debate and ask the broad and important questions as to how macro risk management can be fairly presented in financial statements.
“When IFRS 9 was developed, the IASB took strides to make the accounting better reflect risk management activity. This discussion paper goes further and asks how this can be done for more complex and dynamic hedging strategies used by banks, where the volume of hedging transactions and exposures is far greater and the hedging is done at a far more aggregate level. If some of the ideas discussed in the paper were finalised it would fundamentally change banks’ accounting for lending and deposits.”
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