Document ID: chunk:federal_register_of_legislation:F2025C00209:reg:221:p51
Version: federal_register_of_legislation:F2025C00209
Segment Type: reg
Provision Reference: reg 221 (pt 51/73)
Character Range: 303287–306333

2 RDR entities). In doing so, the Board referred to the 'user need' and 'cost-benefit' principles set out in the 'Tier 2 Disclosure Principles' document of the RDR decision-making framework. These principles were also based on the principles applied by the IASB in developing the disclosures in the IFRS for SMEs Standard and are the same as those summarised in paragraph BC5.

 2.             The Board noted the disclosures would affect only those Tier 2 RDR entities with financial instruments such as variable-rate loans that are referenced to the interest rate benchmarks, including those that have designated hedging instruments in a hedge relationship, lessees with IBOR-linked leases and insurance companies applying the temporary exemption from AASB 9 with IBOR-linked insurance contracts. The Board does not expect many Tier 2 entities to be affected.

 3.             The Board further considered that the disclosure requirements in paragraphs 24I and 24J(a) and (c) of AASB 7 provide further detail about the entity's risk management and hedging strategy. Tier 2 entities already disclose this information under paragraphs 22A and 22B of AASB 7. The additional disclosures are therefore consistent with the current level of RDR disclosures.

 4.             While Tier 2 entities applying RDR are not otherwise required to disclose quantitative information such as that required by paragraph 24J(b) of AASB 7, the Board considered that the information is expected:

          1.                     to be available to an entity as a result of the implementation of the interest rate benchmark reform and therefore the preparation of such disclosure is not expected to be burdensome;

          2.                    not to be onerous as the requirements allow entities to choose the basis for disclosing the quantitative information, thereby being able to leverage information already available, which would reduce costs while still providing useful information; and

          3.                     to be required only for a limited period of time, as the application of the amendments in Phase 2 is associated with changes to financial instruments or hedging relationships subject to a particular reformed benchmark interest rate.

 5.             The disclosure requirements in paragraphs 24I and 24J of AASB 7 also require further information about the disaggregation of amounts presented in financial statements and the transactions and other events encountered by these entities. The Board referred to the Tier 2 Disclosure Principles summarised in paragraph BC5 and considered that where the amounts in question are material, user needs and the benefits of the information would outweigh the limited cost of preparing the disclosures.

 6.             The Board further considered that entities applying the amendments should not be required to disclose the information otherwise required by paragraph 28(f) of AASB 108. As this relief is provided to entities reporting under the Tier 1 framework, the Board took the view that