IFRS 7 Financial Instruments: Disclosures (IFRS 7) is not new - it came into effect for annual periods beginning on or after 1 January 2007. Nonetheless we think this guide is very topical. Experience has shown that IFRS 7 presents challenges, and two years of practical experience enables us to share our insights into the most problematic areas. Moreover, the global financial crisis has put the spotlight on the adequacy of risk and other disclosures concerning financial instruments. The crisis has also led the IASB to add some significant new requirements to IFRS 7 in recent months. The latest edition of the publication has been updated to reflect these requirements which come into effect from 1 January 2009.
Achieving compliance with IFRS 7 takes time and should not be under-estimated. The instruments covered are extensive, ranging from straightforward financial assets and liabilities such as bank accounts, trade receivables and trade payables to more complex financial instruments such as derivatives. Also, IFRS 7 sets out principles for disclosure - it includes some detailed guidance but application requires significant management judgement. It is for management to decide on the precise form and content of disclosure in order to best meet the objectives. Indeed, experience to date shows that disclosures vary considerably between entities.
The member firms of Grant Thornton International have gained extensive insights into the principles for disclosures of financial instruments. We are pleased to share these insights by publishing this guide which reflects the collective experience of Grant Thornton International's IFRS team and member firm IFRS experts.
For further information on the guide or the issues raised in it, please contact us.