IBOR-Reform: IASB proposes amendments to IFRS 9 and IAS 39

The IASB responses to existing uncertainties in connection with the IBOR reform and publishes proposed amendments to IAS 39 and IFRS 9. The proposed amendments relate to specific hedge accounting requirements and shall avoid discontinuation of hedge accounting.

Currently, uncertainty exists about when the current interest rate benchmarks will be replaced and with what interest rate. As both IAS 39 and IFRS 9 require using forward-looking information, the uncertainty surrounding the future structure of interest rate benchmarks could result in a company having to discontinue hedge accounting.

Therefore, the proposed amendments provide relief with regard to

• the highly probable requirement for cash flow hedge accounting,
• the existence of an economic relationship between the hedged item and the hedging instrument (IFRS 9) or
• the prospective assessment of effectiveness (IAS 39).

The amendments shall be applied mandatory for annual periods beginning on or after 1 January 2020.

The Exposure Draft ED/2019/1 Interest Rate Benchmark Reform can be found here.

The comment period ends on 17 June 2019.