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New proposals to address the accounting issues that can arise when an interest rate benchmark is either reformed or replaced (IBOR reform) have been published by the International Accounting Standards Board (the Board). 

The proposals in Interest Rate Benchmark Reform—Phase 2: Proposed amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 would support preparers in accounting for the effects of IBOR reform and in providing useful information about the transition to alternative benchmark rates.  

This a topic where the devil really is in the detail. If stakeholders believe the amendments are not adequate for the task ahead, now is the last chance to speak up.

Chris Spall
KPMG’s global IFRS financial instruments leader

Reliefs, amendments and clarifications in IFRS Standards

Whereas the Phase 1 amendments dealt with the accounting issues that would arise before IBOR reform and focused only on hedge requirements, the Phase 2 amendments deal with IBOR replacement issues and consider various accounting topics.

The exposure draft (ED) proposes targeted reliefs, amendments and clarifications to better reflect the economic substance of IBOR reform in a company’s financial statements and support preparers in applying the requirements of the standards during IBOR reform.

Area Key points
Modification of a financial instrument Clarifies what constitutes a modification of a financial instrument in the context of IBOR reform and provides a practical expedient for modifications directly required by IBOR reform.
Hedge accounting Provides relief to continue hedge accounting when IBOR reform occurs.
End of application for Phase 1 amendments

Provides relief to continue hedge accounting when the Phase 1 amendments cease to apply.

New disclosures Provides disclosures about the nature and extent of risks arising from IBOR reform, a company’s progress in completing IBOR reform and how it is managing the transition.
Lessee accounting for IBOR reform Provides a practical expedient for modifications directly required by IBOR reform.


The ED proposes an effective date of 1 January 2021 and would permit early application. It also proposes mandatory retrospective application, which would include reinstating hedging relationships that have been discontinued solely due to changes directly required by IBOR reform.

You can find a summary of the ED here. (PDF 115 KB) 

Have your say

The ED is open for comment for only 45 days which reflects the Board’s intention to finalise the amendments as early as possible. We encourage preparers and users of financial statements to read the proposals and provide their comments to the Board.

Speak to your usual KPMG contact to find out more about the Board’s deliberations and visit home.kpmg/IBORreform to keep up to date with the latest news and discussion.

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