[PDF] Interest Rate Benchmark Reform Phase 2 - IFRS

What are the amendments to IFRS 7?

• The amendmentsto IFRS 7 require that an entity provide disclosuresthatenable a user to understand the nature and extent of risks arising from IBOR reform, how the entity is managing those risks, its progress in completing the transition from interest rate benchmarks to alternative benchmark interest rates and how it is managing the transition.

What is the purpose of IFRS 9?

The Board amended IFRS 9 to add a practical expedient that enables a company to account for change in the contractual cash flows that are required by the reform by updating the effective interest rate to reflect, for example, the change in an interest rate benchmark from IBOR to an alternative benchmark rate.

What is the basis for conclusions on the interest rate benchmark reform?

The Basis for Conclusions on the Interest Rate Benchmark Reform—PPhase 2, which amends IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16, analyses the considerations of the Board when developing these amendments including comprehensive analysis of the feedback on the proposals that preceded the amendments and how the Board responded to that feedback.

What accounting issues arise before an interest rate benchmark is replaced?

The accounting issues arising before an existing interest rate benchmark is replaced with an alternative risk free rate, i.e. pre-replacement issues, have been considered previously by the IASB and were addressed in Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39 and IFRS 7), published in September 2019 (“Phase I amendments”).