Hedge accounting rules change
The International Accounting Standards Board has announced plans to revolutionise hedge accounting for financial instruments by brushing aside existing rules and introducing a set of core principles instead. IASB chairman Sir David Tweedie said the changes, announced yesterday, would add simplicity to hedge accounting, while allowing for more easily identifiable risk management. Accountancy body ICAEW cautiously welcomed the new proposals – saying they might be an improvement but they were incomplete. ICAEW’s Dr Nigel Sleigh-Johnson said: “The very detailed and specific rules in the current standard made hedge accounting very difficult. It was hard for companies to explain their strategies and for users of financial reports to understand how the hedge accounting results related to them.”