Financial Services Ireland


IBOR transition – IFRS accounting challenges and considerations

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The transition from Interbank Offered Rates (IBORs), including London Interbank Offered Rates (LIBORs) and Euro Offered Rates (EURIBORs), means big changes for financial services.  Trillions of dollars of financial instruments reference IBOR benchmarks, and any company with loans, derivatives, bonds or products referencing an IBOR as a rate is likely to be affected.

Many countries are aiming to transition from IBOR to a new benchmark by the end of 2021. The extensive use of IBORs in financial markets will make this a difficult transition. Everything from sales and trading to treasury, risk management, legal and operations will be affected.

Currently, the financial markets are attempting to navigate the uncertain environment caused by this transition. Every indication shows that, so far, impacted stakeholders are simply not prepared for the extent of the issues and challenges ahead.

One key issue for consideration is the impact of the IBOR transition on financial accounting and reporting.  Most companies will see some impact in this area.  Our latest report examines the transition from IBORs to so-called Risk-free Rates (RFRs) and the impact this will have on financial accounting and reporting plus hedge accounting and valuations. The report also contains our recommendations for what companies should be doing now, as they plan their transition programme.

Some of the challenges that are discussed in the report include:

  • Time critical issues for hedge accounting, including cash flow hedges and amendment to documentation
  • The determination of fair value, modifications and classification of financial instruments
  • Business model criterion (IFRS 9 only)

Download the report through the link below and, if you have a question about any of the issues examined, please do get in touch. If you would like to read more on the topic, EY recently partnered with to produce a special report, ‘Beyond Libor’. You may also be interested in our previous report on the IBOR transition which outlines the progress to date, issues raised by regulatory agencies and the actions companies should take now in preparation.

Thought Leaders

Martina Keane

EY EMEIA Financial Services Chief Operating Officer

Danny Buckley

Banking & Capital Markets, Sector Leader

Cormac Kelly

International Banking Consulting Lead