Where to disclose financial instruments?

This about the location, level of disclosure and aggregation of financial instruments. Where to disclose financial instruments?

An entity is permitted to disclose some of the information required by the financial instruments standards (IAS 32, IAS 39, IFRS 7 and IFRS 9). [IFRS 7 8, IFRS 7 20]

Some entities may want to present some of the information required by IFRS 7, such as the nature and extent of risks arising from financial instruments and the entity’s approach to managing those risks, alongside the financial statements in a separate management commentary or business review. Where to disclose financial instruments?

This is only permissible for disclosures requires by IFRS 7 32 – 41 (that is, nature and risk arising from financial instruments) where the information is incorporated by cross-reference from the financial statements and is made available to users of the financial statements on the same terms as the financial statements and at the same time. [IFRS 7 B6]

An entity has to carefully decide, in light of its own circumstances, how much detail it wants to provide, how much emphasis it wants to place on different aspects of the disclosure requirements and how much aggregation it wants to undertake to satisfy IFRSs’ requirements. Where to disclose financial instruments?

Obviously, a significant amount of judgement is required to display the overall picture without combining information with different characteristics. A balance has to be maintained between providing excessive detail that may not assist user of financial statements by including it amongst a large amount of insignificant detail. Similarly, an entity should not disclose information that is so aggregated that it obscures important differences between individual transaction or associated risk. [IFRS 7 B3]

The disclosures are qualitative and quantitative in nature. So explanations of risks, risk management, risk appetite and such disclosures and table with the levels of input (input 1 level, input 2 level, input 3 level), types of financial instruments and their measurement base. Reconciliations are required to the statement of financial position and/or statement of profit or loss and other comprehensive income.

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