Regulators announced a transition away from InterBank Offered Rates (IBOR or IBORs) to alternative Risk Free Rates (RFR or RFRs) and COVID-19 has not influenced any delay in implementation. Whilst Interest Rate Benchmark Reform will fundamentally impact banks and other lenders, companies reporting under IFRS and UK GAAP and have applied hedge accounting for IBOR-related hedges will be affected across a number of areas. The classification, recognition and measurement of cash products are also impacted to varying degrees. Other accounting estimates may be impacted as well (e.g. IAS 19, 36, 37 and 40, IFRS 2, 13, 15, 16 and 4/17 and associated FRS 102 sections).
The IASB and FRC issued amendments to provide relief for pre-replacement issues in late 2019. The IASB and FRC have since proposed further amendments to provide further relief for replacements issues that arise in relation to modifications of financial instruments, more aspects of hedge accounting, insurance and lease contracts.
Please join Mark Spencer, Director and BDO’s Financial Services Accounting Advisory Leader and Simon Greaves, Valuations Partner, on Thursday 16 July for a webinar on IBOR transition.