Disclosures

An overview of the financial accounting standards for financial instruments and derivatives disclosures are outlined below for companies that follow International, US, or Canadian accounting standards. For a more complete and detailed description of each standard, it is recommended to visit the respective issuer's website.

IFRS 7
FAS 161
CICA 3862
Title Financial Instruments: Disclosures Disclosures about Derivatives and Hedging Financial Instruments – Disclosures
Issuer International Accounting Standards Board (IASB) Financial Accounting Standards Board (FASB) Canadian Institute of Chartered Accountants (CICA)
Region International USA Canada
Effective January 1, 2007 November 15, 2008 October 1, 2007
Overview

IFRS 7 is intended to enhance the disclosure of risks arising from financial instruments and provide greater transparency regarding the monitoring of measurement and management of financial risk. Some key areas:
   • Sensitivity analysis –

      the company must run

      an analysis on their

      positions to see what

      would happen if

      markets changes

      (interest rates, FX

      rates, etc.)
   • Reporting – the

      accounting function

      must report all

      quantitative data that

      management uses in

      making decisions.

FAS 161 requires enhanced disclosures about an entity’s derivative and hedging activities, thereby improving the transparency of financial reporting. Specifically:
   1. How and why an entity

       uses derivatives

       instruments.
   2. How derivative

       instruments and

       related hedged items

       are accounted for

       under FAS 133 and its

       related interpretations.
   3. How derivative

       instruments and

       related hedged items

       affect an entity’s

       financial position,

       financial performance,

       and cash flows.

The disclosure requirements of CICA Section 3862 and IFRS 7 are similar (i.e. they are converged), except in a few circumstances. CICA Section 3862 requires more specific disclosures about hedging transactions.
How FINCAD can help

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Applicable FINCAD solutions:

  • FINCAD Analytics Suite 2009 for Excel
  • FINCAD Analytics Suite 2009 for Developers

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We hope that such information will assist you, but it should not be used or relied upon as a substitute for your own independent research. For a more comprehensive view of the standards/requirements, please visit the respective issuer's website.

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