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Practice versus Prescription in the Disclosure and Recognition of Derivatives
Author(s) -
CHALMERS KERYN G.,
GODFREY JAYNE M.
Publication year - 2000
Publication title -
australian accounting review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.551
H-Index - 36
eISSN - 1835-2561
pISSN - 1035-6908
DOI - 10.1111/j.1835-2561.2000.tb00061.x
Subject(s) - accounting , clarity , hedge accounting , business , derivative (finance) , accounting standard , financial accounting , hedge , preference , mark to market accounting , actuarial science , economics , accounting information system , finance , ecology , biochemistry , chemistry , biology , microeconomics
The contentious issue of the recognition and measurement of derivative instruments is again high on the Australian standard‐setting agenda, following pronouncements by the International Accounting Standards Committee (USC) and Financial Accounting Standards Board (FASB). This study investigates firms' disclosure of derivative accounting policies and measurement practices pursuant to the introduction of AASB 1033. A lack of clarity and completeness in the disclosures suggests that supplementary requirements are necessary. A preference for using hedge accounting is also apparent. Should an Australian standard disallow or impose conditions on hedge accounting, fims will need to alter their current accounting practices and risk management strategies and they will probably reassess their use of derivatives.