Hedge accounting

The International Accounting Standards Board (IASB) has published draft chapter 6 of IFRS 9, Financial Instruments, which deals with general hedge accounting and is expected to be finalised by the end of 2012. Under the new approach, the objective of hedge accounting is to represent, in the financial statements, the effect of an entity’s risk management activities that use financial instruments to manage exposures arising from particular risks that could affect profit or loss (or other comprehensive income (OCI) for some investments in equity instruments).