IASB Seeks Feedback of IFRS 9 Hedge Accounting Requirements

The International Accounting Standards Board (IASB) has issued a Request for Information (RFI) seeking stakeholder feedback on the hedge accounting requirements under IFRS Accounting Standards.  Announced on 28 September 2026, the consultation forms part of the IASB’s Post-implementation Review (PIR) of IFRS 9 Financial Instruments.

The review aims to determine whether the hedge accounting requirements are functioning as intended, providing useful financial information and delivering the anticipated benefits without imposing disproportionate implementation and ongoing compliance costs. The review covers two principal areas:

• IFRS 9 – Financial Instruments: Hedge accounting recognition, measurement and related requirements.
• IFRS 7 – Financial Instruments: Disclosures: Disclosure requirements relating to hedge accounting and risk management activities.

The consultation is an evaluation of existing requirements. It does not introduce new accounting requirements or immediate changes to IFRS 9 or IFRS 7.

1. Background: Purpose of Hedge Accounting

Hedge accounting is intended to reflect the effects of an entity’s risk management activities in its financial statements. Entities commonly use derivatives and other eligible financial instruments to manage exposures arising from:

• Foreign currency movements.
• Interest rate fluctuations.
• Commodity price volatility.
• Other eligible financial risks associated with recognised assets, liabilities, firm commitments and forecast transactions.

Without hedge accounting, differences in the timing or location of recognition of gains and losses on hedging instruments and hedged items may create accounting volatility that does not fully reflect the economic relationship between them.

IFRS 9 seeks to align hedge accounting more closely with an entity’s actual risk management activities, subject to specified eligibility, designation and documentation requirements.

2. Scope of the IASB Review

A. Hedge Accounting Requirements under IFRS 9

The IASB is seeking evidence about how the hedge accounting model operates in practice. Relevant matters include:

• Whether the requirements adequately reflect entities’ risk management activities.
• Whether the eligibility criteria for hedging instruments and hedged items are operating effectively.
• Whether hedge effectiveness assessment and documentation requirements are practical and proportionate.
• Whether accounting for fair value hedges, cash flow hedges and hedges of net investments in foreign operations produces useful information.
• Whether application difficulties, inconsistencies or unexpected costs have arisen.

The review provides an opportunity to identify areas where implementation experience may indicate a need for clarification or further standard-setting activity.

B. Hedge Accounting Disclosures under IFRS 7

The review also considers whether the related disclosures provide useful information to investors and other financial statement users.

IFRS 7 requires disclosures about an entity’s risk management strategy, the effects of hedge accounting on its financial position and performance, and relevant cash flow implications.  Stakeholder feedback will help the IASB assess whether these disclosures:

• Explain how entities manage financial risks.
• Provide sufficient transparency about hedging instruments and hedged exposures.
• Help users understand the effects of hedge accounting on financial statements.
• Achieve an appropriate balance between information usefulness and preparation costs.

3. Post-implementation Review of IFRS 9

The hedge accounting review represents the final stage of the IASB’s broader post-implementation review of IFRS 9. Earlier phases examined:

IFRS 9 component	Principal subject of review
Classification and measurement	Classification and measurement of financial assets and related requirements
Impairment	Expected credit loss model and associated reporting requirements
Hedge accounting	Risk management alignment, hedge accounting requirements and related IFRS 7 disclosures

A post-implementation review evaluates whether a standard is working as intended after implementation.  It does not necessarily result in amendments. Depending on the evidence received, the IASB may determine that existing requirements remain appropriate or identify matters warranting further investigation or standard-setting.

4. Implications for Financial Statement Preparers

The consultation is relevant to entities that use hedge accounting, particularly those with significant foreign exchange, interest rate or commodity risk exposures. Financial reporting teams should consider whether existing hedge accounting policies and processes present practical challenges, including:

Hedge documentation and designation

IFRS 9 requires formal designation and documentation of qualifying hedging relationships. Entities should consider whether the documentation requirements appropriately support their risk management activities.

Hedge effectiveness assessment

Entities should assess whether the hedge effectiveness requirements are sufficiently clear and capable of consistent application across different hedging strategies.

Recognition and measurement

Preparers may wish to identify areas where accounting outcomes are difficult to reconcile with the economic substance of hedging arrangements.

Disclosure usefulness

Entities should consider whether their IFRS 7 disclosures adequately explain risk management objectives, hedge accounting effects and the implications for future cash flows.

5. Relevance to Singapore Financial Reporting

Singapore entities applying Singapore Financial Reporting Standards (International), or SFRS(I), should monitor developments arising from the IASB review.  The corresponding Singapore standards include:

• SFRS(I) 9 – Financial Instruments
• SFRS(I) 7 – Financial Instruments: Disclosures

The review may be particularly relevant to Singapore-listed groups, financial institutions, multinational businesses and companies with material treasury or hedging activities. However, any future changes to IFRS Accounting Standards would need to be considered through the applicable Singapore standard-setting process before affecting SFRS(I) reporting requirements.

The IASB consultation itself does not change current Singapore financial reporting obligations.

6. Practical Recommendations

Companies, auditors and other stakeholders should consider the following actions:

1. Review current hedge accounting practices: Identify recurring application difficulties involving hedge designation, effectiveness assessment or accounting treatment.
2. Evaluate disclosure effectiveness: Assess whether existing disclosures communicate risk management activities and financial statement effects clearly.
3. Document implementation challenges: Gather practical examples, supporting evidence and information about compliance costs.
4. Consider providing feedback: Submit relevant experience to the IASB, particularly where requirements produce unexpected outcomes or implementation difficulties.
5. Monitor future developments: Follow the IASB’s findings and any subsequent proposals for amendments or additional guidance.

7. Conclusion

The IASB’s Post-implementation Review of IFRS 9 hedge accounting requirements is an opportunity to evaluate how effectively the current framework reflects risk management activities in financial statements.  By examining both the accounting requirements in IFRS 9 and the related disclosures in IFRS 7, the IASB aims to assess whether the standards continue to provide decision-useful information at a reasonable cost.

For preparers and auditors, the immediate priority is to assess their practical experience and consider contributing evidence to the consultation.  No immediate changes to accounting policies or financial reporting requirements arise solely from the publication of the Request for Information.

Source:  IFRS Foundation 28 September 2026