Feedback Statement by EFRAG on Certain Account Practices
The European Financial Reporting Advisory Group also known as EFRAG in short form has issued certain feedback statements on the issues of accounting practices. It has been noticed that hedging and macro hedging practices were carried out in the branch of accounting. Therefore certain feedback was issued in this regard. The basic purpose of issuing this feedback statement was to summarize the work by the EFRAG authorities and this work was mostly concerned with the field tests carried out in the margin of hedge accounting reviews of series IFRS 9. There was a mass level discussion carried on the issue of macro hedging procedure.
However it must be noted down that it is not the first time when such feedback is being issued by any organization on accounting handling procedures. Before a similar pattern of report was published in September 2012 when ISAB published a feedback and also published the review draft. The basic purpose of the publishing of this review draft was to provide the constituents the officials with an opportunity to point out and identify some major flaws which are sometimes found to be occurring in the hedge accounting procedures. The published previously be ISAB in 2012 was on the same issue of IFRS 9.
The report on the same activity issued by EFRAG has been published after carrying out an extensive field work on the matter of review drafting. This field survey and testing was conducted in order to determine and check out if there are any fatal flaws in the hedge accounting procedures. In addition to finding out any flaws in the accounting procedure, this survey was also done to test the working of proposals and on the phenomenon of how the actual transactions occur. In carrying out this field test and survey reporting, EFRAG also coordinated with the organization of European National Standards Setters in order to correctly evaluate the situation.
Finally after the field test, an additional consultation was carried out and the impact of the macro hedging was studied and evaluated on the accounting relationship. The procedures as mentioned in the review draft and the ones currently running was then compared and certain changes or improvements were suggested.