FRC amends FRS 102 for interest rate benchmark reform
News types: Publications
Published: 17 December 2019
The FRC has today issued Amendments to FRS 102 – Interest rate benchmark reform, which responds to a current financial reporting issue.
Interest rate benchmarks such as the London Interbank Offered Rate (LIBOR) are being reformed, and it is anticipated that LIBOR will not be available after 2021. There is increasing uncertainty about the long-term viability of some interest rate benchmarks and this gives rise to issues affecting financial reporting in the period before the reform, particularly in relation to hedge accounting.
These amendments to specific hedge accounting requirements in FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland provide relief that will avoid unnecessary discontinuation of hedge accounting during the period of uncertainty. Entities will apply specific hedge accounting requirements assuming that the interest rate benchmark relevant to the hedge accounting is not altered as a result of interest rate benchmark reform.
The amendments are effective for accounting periods beginning on or after 1 January 2020, with early application permitted.