Hedge accounting sees substantial overhaul

[SINGAPORE] The much-awaited new hedge-accounting model, released by the International Accounting Standards Board (IASB) in the UK on Tuesday, represents a substantial overhaul of hedge accounting - arguably the most complex accounting standard out there.

IASB chairman Hans Hoogervorst said: "This is a significant change in accounting that enables companies to better reflect their risk-management activities (and) has received strong support from corporates around the world."

The new model was drawn up in response to concerns raised by preparers of financial statements about the difficulty of understanding and applying hedge-accounting rules.

Mr Hoogervorst said: "It makes it easier for (entities) to really show their activities to minimise their economic risk. It takes out the mathematical bright lines in current hedge accounting and retraces them with more qualitative criteria. It's more principle-based and …