The February 2015, Issue 21 of KPMG ISG’s IFRS Newsletter: Financial Instruments – The Future of IFRS Financial Instruments Accounting summarizes the February IASB meeting at which the Board discussed its April 2014 Discussion Paper about macro hedging. Feedback about the Discussion Paper indicated broad acceptance of the need for the project.
While many respondents stated that the Discussion Paper identified the main limitations of accounting for dynamic risk management activities under IFRS, they expressed mixed views about whether the portfolio revaluation approach would address these limitations. Most respondents supported an approach that would focus on accounting mismatches; revaluing dynamically managed exposures would be inconsistent with that approach. Respondents also supported the optional application of the portfolio revaluation approach but preferred a scope focused on risk mitigation, rather than on dynamic risk management.
The IASB will continue to discuss feedback about the Discussion Paper at its March meeting.