PracticeAuditASB releases draft on FRS 26 amendments

ASB releases draft on FRS 26 amendments

ASB calls for comments on exposure draft of amendments to FRS 26 to clarify what IAS 39 permits as hedged items

The Accounting
Standards Board
(ASB) is inviting comments on its exposure draft of
amendments to Financial Reporting Standard (FRS) 26 (IAS 39) ‘Financial
Instruments: Recognition and Measurement – Exposures Qualifying for Hedge
Accounting’, following similar proposals issued in September 2007 by the
International Accounting Standards
Board
(IASB).

The proposed amendments respond to requests for additional guidlines on what
IAS 39 permits to be designated as a hedged item. They are intended to clarify
IASB’s original intentions for what can be designated as a hedged item and when
an entity may designate a portion of the cash flows of a financial instrument as
a hedged item.

Following the release of the IASB exposure draft, the ASB proposes
corresponding changes to FRS 26 to keep it in line with the international
standard. The ASB believes the proposals set out in this exposure draft should
not impose significant additional costs of preparation but it would welcome te
views whether the benefits from the proposal outweigh any costs involved.

The questions to which ABS particularly wants answers are ‘any issues that
would affect those UK entitities that will be required to implement the proposal
outline’ in the exposure draft; and whether ‘the benefits of the proposals in
the exposure draft would outweigh any additional costs involved. If not, why
not’.

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