Financial Instruments And Hedging: New Rules Of Ifrs

Abstract

In the system of International Financial Reporting Standards (IFRS), the issue of financial instruments is the most complex one. Among instruments accounts standards, IAS 39 is the most complicated document and it rightly brings up a lot of users’ questions. The International Accounting Standards Board (IASB) decided to simplify financial instruments accounts standards. In July, 2014, IASB adopted the final version of IFRS 9 “Financial Instruments” that integrated stages of classification and assessment, impairment and hedge accounting approving provisions of the IASB’s project of replacing IAS 39 and by overruling all previous revisions of IFRS 9 (IFRS 9, 2017). IASB tried to address the concern that appeared in terms of financial crisis and was related to the problem that the model of incurred losses in IAS 39 contributed to the recognition of credit losses with a delay. During the financial crisis, the recognition of credit losses related to loans and other financial instruments with a delay was regarded as a drawback of the current accounting standards. First, it is conditioned by the fact that according to IAS 39, current requirements for impairment are based on “model of incurred losses”, that is, credit losses cannot be recognized until the event, causing credit losses, occurs (IАS 39, 2016). Actually, the new standard introduced the model of expected credit losses based on projections. New IFRS 9 in its final version will completely replace IAS 39 from the 1st of January, 2018.