9 May 2024To:
Members of the Hong Kong Institute of CPAsAll other interested partiesINVITATION TO COMMENT ON THE IASB EXPOSURE DRAFTContracts for Renewable Electricity– Proposed amendments to IFRS 9 and IFRS 7Comments to be received by 5 July 2024The Financial Reporting Standards Committee (FRSC) of the Hong Kong Institute of CertifiedPublic Accountants (Institute) is seeking comments on the International Accounting StandardsBoard (IASB) Exposure Draft Contracts for Renewable Electricity – Proposed amendments toIFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures. The Exposure Draftis available on the Institute's website:
https://www.hkicpa.org.hk/en/Standards-setting/Standards/Open-for-comment-documents/fredRenewable electricity contracts, which are often structured as power purchase agreements, aimto secure the stability of and access to renewable electricity sources. However, renewableelectricity markets have unique characteristics. Renewable electricity sources depend on natureand its supply cannot be guaranteed. The contracts often require buyers to take and pay forwhatever amount of electricity is produced, even if that amount does not match the buyer’s needsat the time of production. These distinct market characteristics have created accounting challengesin applying the current accounting requirements, especially for long-term contracts.To address these challenges, the IASB is proposing some targeted changes to the accounting forcontracts with specified characteristics. The proposals would:
address how the ‘own-use’ requirement would apply;
permit hedge accounting if these contracts are used as hedging instruments; andadd disclosure requirements to enable investors to understand the effects of these contractson a company’s financial performance and future cash flows.The FRSC invites your comments on the Exposure Draft by 5 July 2024 to allow your commentsto be considered in developing its response to the IASB. Comments should be supported byspecific reasoning and should be submitted in written form.Comments may be sent by mail, fax or e-mail to:
Standard Setting DepartmentHong Kong Institute of Certified Public Accountants37th Floor, Wu Chung House213 Queen’s Road EastWanchai, Hong KongFax number (+852) 2865 6603E-mail: commentletters@hkicpa.org.hkComments will be acknowledged and may be made available for public review unless otherwiserequested by the respondent.
Invitation to Comment on IASB Exposure Draft on Contracts for Renewable Electricity - Proposed amendments to IFRS 9 and IFRS 7
下载原件9 May 2024To:
Members of the Hong Kong Institute of CPAsAll other interested partiesINVITATION TO COMMENT ON THE IASB EXPOSURE DRAFTContracts for Renewable Electricity– Proposed amendments to IFRS 9 and IFRS 7Comments to be received by 5 July 2024The Financial Reporting Standards Committee (FRSC) of the Hong Kong Institute of CertifiedPublic Accountants (Institute) is seeking comments on the International Accounting StandardsBoard (IASB) Exposure Draft Contracts for Renewable Electricity – Proposed amendments toIFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures. The Exposure Draftis available on the Institute's website:
https://www.hkicpa.org.hk/en/Standards-setting/Standards/Open-for-comment-documents/fredRenewable electricity contracts, which are often structured as power purchase agreements, aimto secure the stability of and access to renewable electricity sources. However, renewableelectricity markets have unique characteristics. Renewable electricity sources depend on natureand its supply cannot be guaranteed. The contracts often require buyers to take and pay forwhatever amount of electricity is produced, even if that amount does not match the buyer’s needsat the time of production. These distinct market characteristics have created accounting challengesin applying the current accounting requirements, especially for long-term contracts.To address these challenges, the IASB is proposing some targeted changes to the accounting forcontracts with specified characteristics. The proposals would:
address how the ‘own-use’ requirement would apply;
permit hedge accounting if these contracts are used as hedging instruments; andadd disclosure requirements to enable investors to understand the effects of these contractson a company’s financial performance and future cash flows.The FRSC invites your comments on the Exposure Draft by 5 July 2024 to allow your commentsto be considered in developing its response to the IASB. Comments should be supported byspecific reasoning and should be submitted in written form.Comments may be sent by mail, fax or e-mail to:
Standard Setting DepartmentHong Kong Institute of Certified Public Accountants37th Floor, Wu Chung House213 Queen’s Road EastWanchai, Hong KongFax number (+852) 2865 6603E-mail: commentletters@hkicpa.org.hkComments will be acknowledged and may be made available for public review unless otherwiserequested by the respondent.