Financial Reporting Requirements On The Use Of The Financial Instruments According To IFRS 7 - Financial Instruments – Disclosures
Author:
Univ. prof., PhD Elena DOBRE
JEL:
DOI:
Keywords:
financial reporting, information to be provided, financial risks, hedge accounting, fair value
Abstract:
IFRS 7 has been approved by the International Accounting Standards Board (IASB) as result of the major developments during the last years of the techniques used by the entities for the risk assessments and management resulting from the use of the financial instruments. This way, new concepts and approaches for the risk management have been accepted. The users of the financial statements consider that they need information on the entity risk exposure and information on the risk management. This information influences the assessment, at the level of an entity, of the financial position, financial performance, as well as of the value, timing and uncertainty of the future cash flows. \r\n\r\nConsequently, the reason for revising the IAS 32 Financial instruments – Presentation and Disclosure and withdrawal of the IAS 30 Information presented in the financial statements of bank and other similar institutions was to obtain a better transparency concerning the entity risks from using financial instruments and their risk management. A better transparency concerning these risks allows the users of the accounting information better judgments regarding the entity risks resulting from using financial instrument ts owned or used by the entities preparing and publishing financial statements. \r\n\r\nThe scope of IFRS 7 is to guide the entities applying IFRS to disclose in their financial statements information that allow the user to assess: the importance of the financial instruments for the entity financial position and performance, the nature and the magnitude of the risk exposure for the entity resulting from the use of financial instruments during the period and at the reporting date, as well as the risk management by the respective entity. \r\n\r\nThe principles of this IFRS add principles for financial assets and financial liabilities recognition, measurement and disclosure of the IAS 32 Financial instruments: Disclosure and IAS 39 Financial Instruments: recognition and measurement. IFRS 7 applies to the financial instruments recognized and unrecognized in the IAS 39.\r\n