accounting standards IAS 39 and IFRS 9. The problem of this thesis is: What options and restrictions does companies meet in relation to hedge accounting of non-financial items under the upcoming international accounting standard (IFRS 9) present compared to the existing standard (IAS 39)? The problem is approached using the normative accounting theory. Thus, the comparison of the two standards is operationalized as a comparison between two normative frameworks. The normative framework consists of 5 layers: the information need of the users of the financial statements, the qualitative features, and the last three layers are summed up in one; measurement systems. In order to compare the two accounting standards, I first outline the existing accounting standard, IAS 39. Afterwards, I analyze the differences to the new accounting standard, IFRS 9. Finally, I discuss the differences between the two standards based on changes in the different layers of the conceptual framework. The users' information needs are not altered in the update of the accounting standard. However, it can be argued that due to the financial crisis the society is now demanding greater disclosures relating to hedge accounting. Furthermore, using IFRS 9 does not alter the measurement and classification of the instruments compared to IAS 39. However, there is a new option called own-use exemption, which allows companies to include commodity contracts that otherwise were deemed out of IAS 39. This option makes it easier for companies with this type of commodity contracts to achieve a treatment similar to hedge accounting. Finally, when comparing the two international accounting standards there are differences in the qualitative features. More specifically, using IFRS 9, the companies are more likely to achieve a financial statement (compared to IAS 39), which is more in line with the company’s actual risk strategy. Furthermore, there are several examples of possibilities of applying hedge accounting using IFRS 9, in areas where it was not possible under IAS 39. As an example, the new accounting standard makes it possible to hedge risk components of non-financial contracts, if they can be separately identified and measured reliably. In addition, through IFRS 9 companies get the opportunity to manage their risks individually without having to discontinue and redesignate the hedge relationship, if one risk is already hedged and the company wishes to hedge yet another risk in the same commodity contract. The conclusion in the thesis is that IFRS 9 does lead to a greater utility for the users of the financial statement. Especially the link between the company’s risk strategy and the financialstatement is an advantage for the users of the financial statement. Also the new opportunities for companies to apply hedge accounting in areas where IAS 39 does not offer any solutions results in a more fair financial statement. This leads to a conclusion that IFRS 9 primarily poses options for companies wishing to apply hedge accounting to commodity contracts. The analysis does not reveal many restrictions of IFRS 9 compared to the former standard, IAS 39. The increased disclosures are discussed, but they can also be seen as an advantage for users of financial statements. The thesis sums up the discussion with a critique of the theoretical framework.
|Educations||Graduate Diploma in Finance, (Diploma Programme) Final Thesis|
|Number of pages||72|