The Financial Reporting Standards Council (FRSC) has issued an Invitation to Comment on the exposure draft of proposed amendments to IAS 39, Financial Instruments: Recognition and Measurement – Exposures Qualifying for Hedge Accounting, issued by the International Accounting Standards Board (IASB). The amendments are intended to clarify what can be designated as a hedged item in a hedge accounting relationship.

The exposure draft specifies the risks that qualify for designation as hedged risks when an entity hedges its exposure to a financial instrument. In addition it clarifies when an entity may designate a portion of the cash flows of a financial instrument as a hedged item.

The proposals respond to requests for additional guidance on what IAS 39 permits to be designated as a hedged item. Although the IASB is undertaking research that will ultimately lead to the replacement of IAS 39, that work is at an early stage. The IASB therefore decided to propose the amendments contained in the exposure draft.

The FRSC Invitation to Comment and IFRS ED on proposed amendments to IAS 39 may be downloaded from the Philippine Financial Reporting Standards (PFRS) website, within the PICPA website (www.picpa.com.ph). The IFRS ED on proposed amendments to IAS 39 may also be downloaded from the IASB website  (www.iasb.org).

The FRSC invites comments on the IFRS ED on proposed amendments to IAS 39 by December 27, 2007, to enable the Council to consider and include comments from Philippine respondents in its response to the IASB.