January 2006
In this newsletter, we look at the following topic:
HKFRS 7 - Financial Instruments Disclosures (for everyone, not just banks)
HKFRS 7, Financial Instruments: Disclosures is a comprehensive disclosure standard that applies to all companies. It provides the market with more information about an entity's financial assets and liabilities, and their associated risks. It requires disclosures about:
- the significance of financial instruments for an entity's financial position and performance, including many of the requirements currently in HKAS 32; and
- the nature and extent of risks arising from financial instruments.
Management must identify and consider the key messages it wishes to communicate to the market via the new disclosures. These disclosures provide a significant opportunity for entities to explain their risk management processes. There is the risk of a negative market reaction if the enhanced and more transparent disclosures reveal weaknesses in those processes. The disclosures (especially those related to risk) will require considerable resources to develop and draft. Management must consider them prior to the standard's effective date of 1 January 2007. The changes brought by the new standard can be split into four key areas:
- disclosing risk 'through the eyes of management';
- expanded quantitative disclosures of risk;
- the introduction of sensitivity analysis; and
- enhanced disclosure of an entity's financial position and performance.
Read more by downloading the pdf file below.
Note: HKFRS has converged with IFRS effective from 1 January 2005. All contents contained in this newsletter are also applicable to IFRS preparers.
Find Out More
If you would like to have more information on the above, please contact Gladys Lau, +852 2289 2976, email me.
Get Your Copy Here
Download our HKFRS News - January 2006 (pdf file, 392KB) for your reference.
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