The Australian Accounting Standards Board (AASB) released ED 158, which proposes amendments to AASB 139 "Financial Instruments: Recognition and Measurement", in relation to exposures qualifying for hedge accounting. The proposed changes would clarify what can be designated as a hedged item in a hedge accounting relationship. The exposure draft identifies the risks within a financial instrument, such as interest rate risk, foreign currency risk, credit risk and pre-payment risk, that can be designated as a hedged item. Additionally, the exposure draft clarifies the portions of cash flows in a financial instrument that can be designated as a hedged risk. 
 
The Institute agreed with the proposals to identify specific risks that qualify for hedge accounting, as a means to improving the clarity and understandability of the current standard. 
 
View our final submission here. 
 
This article is current up to 5 December 2007