Explanatory Statement
Accounting Standard AASB 2013-4
Amendments to Australian Accounting Standards – Novation of Derivatives and Continuation of Hedge Accounting
July 2013
EXPLANATORY STATEMENT
Reasons for Issuing AASB 2013-4
AASB 2013-4 Amendments to Australian Accounting Standards – Novation of Derivatives and Continuation of Hedge Accounting makes amendments to Australian Accounting Standard AASB 139 Financial Instruments: Recognition and Measurement.
These amendments arise from the issuance of Novation of Derivatives and Continuation of Hedge Accounting (Amendments to IAS 39) by the International Accounting Standards Board in June 2013.
Main Features of AASB 2013-4
AASB 2013-4 makes amendments to AASB 139 to permit the continuation of hedge accounting in circumstances where a derivative, which has been designated as a hedging instrument, is novated from one counterparty to a central counterparty as a consequence of laws or regulations.
Application Date
AASB 2013-4 applies to annual reporting periods beginning on or after 1 January 2014. Early application is permitted for annual reporting periods beginning on or after 1 January 2005 but before 1 January 2014.
Consultation Prior to Issuing this Standard
The AASB issued Exposure Draft ED 236 Novation of Derivatives and Continuation of Hedge Accounting (Proposed Amendments to AASB 9 and AASB 139) in March 2013 for a 19 day public comment period. ED 236 reproduced the proposals in the IASB’s Exposure Draft ED/2013/2 Novation of Derivatives and Continuation of Hedge Accounting (Proposed Amendments to IAS 39 and IFRS 9) (February 2013).
The AASB received four submissions from Australian constituents on ED 236. Most were generally supportive of the proposals. The AASB considered the comments it received in making its submission to the IASB on ED/2013/2 and in finalising AASB 2013-4.
A Regulation Impact Statement (RIS) has not been prepared specifically in connection with the issuance of AASB 2013-4 as the amendments made do not have a substantial direct or indirect impact on business or competition, are of a minor or machinery nature or clarify existing requirements.
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the
Human Rights (Parliamentary Scrutiny) Act 2011
Accounting Standard AASB 2013-4
Amendments to Australian Accounting Standards – Novation of Derivatives and Continuation of Hedge Accounting
Overview of the Accounting Standard
AASB 2013-4 makes amendments to AASB 139 to permit the continuation of hedge accounting in circumstances where a derivative, which has been designated as a hedging instrument, is novated from one counterparty to a central counterparty as a consequence of laws or regulations.
Human Rights Implications
This Standard is issued by the AASB in furtherance of the objective of facilitating the Australian economy. It does not diminish or limit any of the applicable human rights or freedoms, and thus does not raise any human rights issues.
Conclusion
This Standard is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.