Finpro GAAP Knowledge Quest
Impact on accounting for financial instruments due to Interest Rate Benchmark Reform (IRBR) Overview By the end of year 2021, some major interbank offer rates such as LIBOR, EURIBOR, TIBOR will cease to be published and will be replaced by new interest rate benchmarks. This poses challenges for accounting of broad range of financial products and contracts which use these interbank offer rates as benchmarks. To address these challenges amendments have been made by IASB to the relevant IFRS’ and in India, corresponding changes have been made to Ind AS’. The amendments are issued to provide guidance on accounting of financial instruments during the phase of transitioning to new benchmarks (pre replacement phase) and after the replacement of existing interbank offer rates with new rates (replacement phase). This document aims to summaries the amendments and explain their practical applicability by way of an example. What is Interest Rate Benchmark Reform? Interest rate benchmarks (IRBs)