The International Accounting Standards Board (IASB) has released an amendment on how the existing standard on hedge accounting can be applied.

The amendment to IAS 39 Financial Instruments: Recognition and Measurement clarifies how the existing principles underlying hedge accounting should be applied to a) a one-sided risk in a hedged item and (b) inflation in a financial hedged item.

The change follows a request by the International Financial Reporting Interpretations Committee (IFRIC) to IASB to provide additional guidance on what can be designated as a hedged item because the responses to an exposure draft of proposed guidance, published in September 2007, indicated diversity or likely deversity in practice.

The amendment is required to be applied retrospectively for annual periods beginning on or after July 1, 2009, with earlier application permitted.