Treasury Management Internation Logo

EU endorses IFRS 9, companies can no longer delay action says Reval

Published 

London – With International Financial Reporting Standard (IFRS) 9, Financial Instruments, now endorsed by the European Commission, all companies reporting under IFRS that want to implement hedge accounting compliance technology should now have projects underway, advises Reval, a global SaaS provider of treasury and risk management solutions. The reporting standard, which replaces International Accounting Standard 39, Financial Instruments: Recognition and Measurement becomes mandatory for years beginning on or after 1 January 2018.

“There is not much time left to research, select, approve and implement new technology, if you don’t already have a IFRS 9 compliant system in place,” explains Jacqui Drew, Director of Solution Consulting, Reval. “While companies in jurisdictions that allow early adoption have already begun implementing new IFRS 9 functionality, there are still several, including all those in the EU, that have yet to begin. I don’t think companies quite realize the time that is required to take a project from beginning to end.”

The replacement of IAS 39 with IFRS 9 began in 2008, but the final standard was not issued in its entirety until 2014. The new standard comprises Classification & Measurement, Impairment and Hedge Accounting, each of which were completed at different times. While some companies have early adopted the standard in countries like Australia, Canada, Japan, Switzerland, South Africa and India, those incorporated in the European Union have been delayed until 22 November 2016, when the European Commission finally endorsed the standard.

“Many companies outside the EU that we have been working with over the last 12-18 months have decided to use early adoption as an opportunity to look more fundamentally at how they are hedging exposures and how they can gain financially from new hedging strategies previously disallowed under IAS 39,” Drew says. Unlike hedge accounting under IAS 39, the new standard enables companies to better reflect their risk management activities in their financial statements. Of particular interest to commodity hedgers is the ability to hedge components of non-financial items. In a recent Reval survey, almost 70 percent of corporates said they were considering or had already considered entering into new hedging strategies as a result of IFRS 9. “You don’t want to be left behind against your competitors,” Drew warns.

IFRS 9 also allows the time value of options to be initially recorded in equity (Other Comprehensive Income), instead of in the income statement, where it would otherwise cause P&L volatility.

Most recent episodes

Trends in RFPs and RFIs: What Treasurers Want

Eleanor Hill (TMI) invites Dick Oskam and Bert Van Drie (ING) into the TreasuryCast hotseat to find out what trends treasurers want to see emerge from the Request for Proposal (RFP) and Request for Information (RFI)...

33:16

Creating a Connected Financial Office

When data flows are connected, it’s so much easier to make quick and accurate decisions. This is the principle behind the notion of the connected financial office. In this podcast, Gareth Priest (Bottomline Technologies) provides informed advice on how...

18:34

Journeys to Treasury: Managing Changing Perspectives

For this special edition of TreasuryCast, we showcase the results of the Journeys to Treasury 2021-22 report. Here, Jan Dirk van Beusekom (BNP Paribas) and Christian Mnich (SAP) offer Eleanor Hill (TMI) an informed view...

33:03

Cybersecurity for Treasurers

Cybercrime and fraud is on the rise and new attack vectors are emerging with alarming frequency. In this podcast, Nicolas Trimbour (BNP Paribas) and Laurent Sarrat (Sis ID) provide an overview of the latest tools and best practices treasurers should be employing...

37:53

A New Treasury Ecosystem: Open Banking, APIs, and BaaS

For this special edition of TreasuryCast, Eleanor Hill invites Peter Claus-Landi (GE) and Jared Smith (HSBC) to cover how key API-centric developments are changing the treasury landscape. With APIs significantly...

18:02

Using Data as the Corner for Finance Transformation

Many organisations face challenges in managing spend, payments, and cash effectively due to siloed processes and datasets across multiple departments. In this podcast, Ulrika Haug (Coupa) and Kim Estes (The Knot...

29:20

Realising Treasury’s True Value – A Strategy for Change

Join John Meehan (Froneri) to hear how Froneri utilised a year of no acquisitions and no meetings to implement a total transformation project through implementation of a TMS, unlocking the true value of his corporate...

49:14

Lessons from Innospec on Building a Strong Cash Culture

Without ready access to the key metrics of cash forecasting, Andrew Hawes (Innospec) knew the business could do little more than react to events. But without the collaboration of key stakeholders too, he knew that...

35:08

How to Make Your TMS the Ultimate Investment Tool

The right TMS can be a huge asset to treasury. But these one-stop shops often fall short when it comes to short term investment workflows. In this podcast, Ed Lopez, James Griffin (Calastone), Jeannot Jonas (Carrier...

01:24:00