The Practical Application Of Hedge Accounting Under Ifrs 9 And Its Impact On Financial Reporting

Abstract

Background: The study aims to review the practical applications of hedge accounting IFRS 9 to understand its impact financial reporting. Hedge accounting gives a clear idea that how the true economic risk management is possible based on the currency interest rates and commodity price rates. The role of the profit and loss is a prominent parameter in this context. It also demands for the risk management to reveal the handling based on currency market dealing for highly effectiveness on financial tools.

Method: The study employs a mixed method where primary data is taken from the respondents’ sample of 150 samples. 4 hypotheses are justified and proved in the end. Smart PLS is employed in this regard to help the data analysis. Secondary data is taken from the literature and supports the thematic analysis for research questions to be answered.

Findings: The hedge accounting affects the income statements and equity where the balance sheets are also influenced because accurate representation of financial performance is based on the perspective of handling hedge accounting as an accountable and important system.

Recommendations: Training the accounting professionals about IFRS 9 and using effectiveness testing is playing an essential role in handling the challenges of financial risks are recommended.