| Summary: | Radical changes have been introduced in the hedge
accounting framework by the new IFRS accounting
standards. In particular, the hedge effectiveness regime
has been completely overhauled and replaced by a
strong principles-based charter. The relevance of
qualitative assessment procedures has, accordingly,
increased making the audit of such assignments
immensely challenging. Pronouncements from
regulatory bodies providing professional guidance on
audit issues of hedge accounting and effectiveness
testing have failed to keep pace with this rapid transition,
enhancing the complexity of such audit exercises. In the
present article, after providing a brief analysis of the
contemporary hedge accounting and effectiveness
testing provisions, we dwell upon the salient issues
connected with the auditor’s predicament and highlight
the way forward in the changed environment.
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