CFA Institute has undertaken a study to examine the quality of existing financial instruments risk disclosures. The study evaluated credit, liquidity, and market risk disclosures and disclosures for derivatives and hedging activities under IFRS.
CFA Institute has undertaken a study to examine the quality of existing financial instruments risk disclosures. This report, Volume 2, provides a user perspective on the disclosures of derivatives and hedging activities. It is an extension to Volume 1 which provided a user perspective on financial instrument credit, liquidity and market risk disclosures. In its approach, the study
- Reviews relevant literature on derivatives and hedging activities disclosures;
- Obtains user feedback through user surveys and interviews; and
- Reviews the quality of disclosures made in 2011 and 2010 annual reports of 30 IFRS-reporting companies (including a detailed case study review of the disclosures of Lufthansa Airlines). The company review contextualises the user feedback obtained. As a result of reviewing company annual reports, some examples of both useful and less useful disclosures are highlighted.
As discussed in Section 1.5, the study triangulates these sources of information in order to recommend derivatives and hedging disclosures which are more useful for users of financial statements.