IASB Proposes Risk Mitigation Accounting Amendments to IFRS 9 and IFRS 7

Posted 12 November 2026 Written by Acts Online
Category Accounting & Financial Reporting

Brought to you by SA Accounting Academy: The International Accounting Standards Board (IASB) has published proposed amendments to IFRS 9 (Financial Instruments) and IFRS 7 (Financial Instruments: Disclosures) to refine risk mitigation accounting requirements.

In terms of section 29 of the Companies Act, No. 71 of 2008 and Regulation 27 of the Companies Regulations, 2011, qualifying South African reporting entities are required to comply with financial reporting standards consistent with International Financial Reporting Standards (IFRS). The IASB’s proposals aim to address accounting mismatches and better reflect risk management strategies where entities utilize financial instruments to mitigate dynamic risks.

Key Proposals Under IFRS 9 and IFRS 7

The proposed amendments focus on bridging gaps between corporate treasury risk practices and financial statement presentation:

  • Expanded Risk Mitigation Scope: Refining the eligibility criteria under IFRS 9 to allow entities to align accounting outcomes with economic risk management activities, particularly where derivative and non-derivative structures are managed together.
  • Enhanced Presentation Consistency: Addressing volatility in profit or loss arising from timing mismatches in recognition between risk mitigation instruments and designated exposures.
  • Targeted IFRS 7 Disclosures: Introducing explicit qualitative and quantitative disclosure obligations in IFRS 7 detailing how entities manage exposures, the nature of risks hedged or mitigated, and the resulting financial impact on balance sheet line items.

These proposals apply to entities with active hedging or dynamic risk mitigation programmes, notably financial institutions, corporate treasuries, and commercial entities managing interest rate or commodity risks.

What this means for you, your business, or your clients

  • For yourself: Review the IASB exposure proposals against your current IFRS financial instrument advisory competencies to advise reporting entities on upcoming hedge accounting changes.
  • For your business: Audit your practice’s technical accounting tools and standard disclosure templates to prepare for updated IFRS 7 reporting requirements once finalized.
  • For your clients: Assess client treasury and risk mitigation strategies to establish whether existing hedging structures will require re-documentation or revised designations under amended IFRS 9 criteria.

Originally published at https://accountingacademy.co.za/news/read/iasb-risk-mitigation-accounting-proposed-amendments-to-ifrs-9-and-ifrs-7

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