Reval Says Divergence from IFRS 9 Hurts Corporates’ Competitive Edge

Published 

Not All Companies Will Benefit from New IFRS 9 Hedge Accounting Rules

New York, November 26, 2013 – Multinational corporations reporting under financial standards that diverge from the new IFRS 9 Financial Instruments amendment on hedge accounting completed last week by the International Accounting Standards Board (IASB) will be at a competitive disadvantage from companies that can adopt the standard today, says Reval, a leading global Software-as-a-Service (SaaS) provider of comprehensive and integrated Treasury and Risk Management (TRM) solutions. The IASB completed amendments to the long-awaited replacement of IAS 39’s phase three, hedge accounting, with an undetermined effective date, but with early adoption allowed immediately.

“One of the clear benefits of hedge accounting under IFRS 9 is that it enables companies to better reflect their risk management activities in their financial statements,” explains Blaik Wilson, Chairman of Reval’s Hedge Accounting Technical Taskforce. “These companies will have a competitive advantage in global markets where investors place a premium on companies that can smooth out profit and loss volatility on their financial statements.”

The new standard will enable companies to suffer less P&L volatility on common hedging scenarios than under the current IAS 39 or under U.S. GAAP. Commodity hedgers reporting under IFRS 9, for example, will be able to hedge components of non-financial items, such as the “rubber in the rubber tire”. As such, these companies will be able to provide stakeholders with a financial picture more consistent with the economics of their hedging strategies. In addition, companies can mitigate P&L volatility associated with option time value (the value of the chance to exercise an option over time) and will no longer risk failing hedge effectiveness criteria embedded in the infamous ‘80-125%’ bright line rule, now removed under the new standard.

The IFRS Foundation reports that “The IASB is continuing to consider limited amendments to the classification and measurement requirements already included in IFRS 9 and is working on finalizing the new expected credit loss impairment model.”

Most recent episodes

Advantage Treasury

Eleanor Hill is joined in the virtual TreasuryCast studio by Nicolas Cailly and Philippe Penichou (Societe Generale) to look at treasury trend predictions for the remainder of 2022, with a particular focus on virtual accounts. In this deep dive into current and future treasury priorities, our guests consider...

24:22

40th Annual New York Cash Exchange: What Can Treasurers Expect?

Ahead of the 40th annual New York Cash Exchange, two of TMANY’s distinguished board members, David Miller and Timothy T. Hesler, CTP, provide TMI CEO, Robin Page, with a quickfire rundown of what attendees can expect from this year’s conference. Our guests share their aspirations for the event,...

09:58

Expectation-Beating Inflation Prints Ratchet Up Pressure on Monetary Policy

Welcome to the third edition of Liquidity Link Live, your exclusive market analysis provided by Northern Trust Asset Management, one of the world’s largest cash managers. Tune in each month to discover the very latest insights on the UK, Eurozone and US markets. This edition was recorded on the 9th May...

04:48

Making the Sustainable Transition: A Roadmap to ESG in Treasury

Over the last 18 months, Societe Generale has experienced a steady increase in requests from their corporate clients to integrate ESG features in treasury management.  Louis-David Rouyer, Philippe Pougeard, and Emmanuelle Petelle (Societe Generale) provide TMI’s Eleanor Hill with a whistlestop run...

22:24

Lift Off for Fed Rate Rises

Welcome to the latest edition of Liquidity Link Live, your exclusive market analysis provided by Northern Trust Asset Management, one of the world’s largest cash managers. Tune in each month to discover the very latest insights on the UK, Eurozone and US markets. This edition was recorded on the 5th of...

04:58

Treasury in 2022 and Beyond

Industry experts Bob Stark (Kyriba) and Sebastian di Paola (PwC) join TMI’s Editor, Eleanor Hill, to explore the very latest treasury trends – and to discuss how smart treasurers can get ahead of the game by ...

43:21

How BearingPoint Harnessed Data-Driven Forecasting with CashAnalytics and SAP

Listen back to our recent forecasting masterclass, where Group Treasurer Eveline Stam, and Conor Deegan (CashAnalytics) provided TMI’s Eleanor Hill with a comprehensive overview of how consultancy firm BearingPoint achieved company-wide cash forecasting nirvana by combining specialist solutions from...

37:14

The 3 T’s of The Future: Tech, Treasury, and Transformation

Over the past two years, an increasingly dynamic environment has not only accelerated technology development – from quantum computing to blockchain technology, and even the metaverse – but also technology adoption, bridging colleagues and breaking down silos in a remote work world. In this podcast,...

44:02

Monetary Policy Continues to Drive Markets as Ukraine Invasion Weighs on March Meetings

Welcome to the second edition of Liquidity Link Live, your exclusive market analysis provided by Northern Trust Asset Management, one of the world’s largest cash managers. Tune in each month to discover the very latest insights on the UK, Eurozone and US markets. This edition was recorded on the 3rd of...

05:25

Tax Spotlight: How the OECD’s Two-Pillar Solution Impacts Treasury

Aaron Lee and Joseph Lee (DBS Bank) join TMI’s Eleanor Hill to discuss how the OECD’s Two-Pillar Solution aims to address the tax challenges arising from the digitalisation of the economy. Ahead of the 2023 implementation date multinational corporates will have much to consider around these reforms....

24:00