EY Applying Hedging

hedge accounting under IFRS 9 February 2014 Applying IFRS February 2014 hedge accounting under IFRS 9 1 Contents 1. Introduction 2 The main changes in the IFRS 9 hedge accounting requirements 3 2 Risk management 4 Object of hedge accounting 4 Risk management strategy versus risk management objective 4 3. hedge items 6 General requirements 6 Hedges of exposures affecting other comprehensive income 6 Aggregated exposures 7 Risk component 10 Components of a nominal amount 15 Groups of items 18 Credit risk exposures 26 4. Hedging Instruments 27 5 Qualifying criteria 30 Designation 30 Economic relationship 31 Impact of credit risk 32 Setting the hedge ratio 35 Designating proxy hedges 37 6.

in hedging activities in both financial and non-financial services entities. 1.2 The main changes in the IFRS 9 hedge accounting requirements Hedge accounting under IAS 39 Financial Instruments: Recognition and Measurement is often criticised as being complex and rules-based, thus, ultimately not reflecting an entity’s risk management activities.

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  Financial, Accounting, Hedge, Hedge accounting, Hedging

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