In February 2013, the IASB issued Exposure Draft ED/2013/2 'Novation of Derivatives and Continuation of Hedge Accounting, Proposed amendments to IAS 39 and IFRS 9' (the ED).
EFRAG welcomes the IASB’s responsiveness in addressing this issue in a quick and pragmatic manner.
EFRAG supports the proposals as discontinuation of hedge relationships in this specific situation would not provide useful information. However:
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EFRAG believes the IASB should clarify that novations that take place to meet the requirements of (substantially) enacted laws or regulations – but that are voluntary only in the sense that they take place before the legal novation deadline – would also fall within the scope of the proposed amendment;
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Early application should be permitted so that entities can apply the requirements to novations that take place prior to the finalisation of these amendments.
Press release
Draft comment letter
© EFRAG - European Financial Reporting Advisory Group
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