IASB Exposure Draft: Exposures Qualifying for Hedge Accounting

This exposure draft contains proposals by the International Accounting Standards Board to amend IAS 39 Financial Instruments: Recognition and Measurement. The purpose of the amendments is to clarify when an entity may designate an exposure to a financial instrument as a hedged item.

The proposed amendments specify:

1. (a) the risks that qualify for designation as hedged risks when an entity hedges its exposure to a financial instrument; and
2. when an entity may designate a portion of the cash flows of a financial instrument as a hedged item.

The proposed amendments are intended to clarify the Board’s original intentions regarding what can be designated as a hedged risk and when an entity may designate a portion of the cash flows of a financial instrument as a hedged item.

Invitation to comment

The Board invites comments on the amendments proposed in this exposure draft, particularly on the questions set out below. Comments are most helpful if they:

1. comment on the question as stated;
2. indicate the specific paragraph or group of paragraphs to which they relate;
3. contain a clear rationale; and
4. if applicable, include an alternative the Board should consider.

The Board is not seeking comments on matters in IAS 39 other than those set out
in this exposure draft.

Respondents should submit comments in writing so as to be received no later than 11 January 2008.