In July 2023, the International Accounting Standards Board (IASB) added a project to research whether narrow-scope amendments to IFRS 9 Financial Instruments could be made to better reflect how financial statements are affected by Power Purchase Agreements (PPAs) (both physical and virtual). Our Financial Instruments team explain the implications below.
What's proposed
In its public meeting with the Interpretations Committee (Committee) members’ on 29 November 2023, the project team sought inputs into the possible approaches to narrow-scope amendments to IFRS 9. Three potential approaches were proposed by the project team for future IASB consideration:
- Amend the guidance on how to assess own-use requirements in IFRS 9
- Amend hedge accounting requirements in IFRS 9
- Exceptions for PPAs
The proposal by the project team and the views expressed by the Interpretations Committee (Committee) members’ during the meeting are summarised in our publication.
What this could mean for your business
Proposed approaches could result in changes to financial reporting of power purchase agreements within the scope of IFRS 9 (whether physical or virtual) including how own-use exemption and hedge accounting is applied for such contracts.
It could also result in disclosure requirements providing additional information on the risk exposure and risk management associated with these contracts.
Get in touch
If you have any queries about the proposals detailed in our report above, please get in touch with our Financial Instruments team.
We welcome the opportunity to discuss your requirements to find the appropriate solution for you. We look forward to hearing from you.
