IPSAS 29
Active
Financial Instruments: Recognition and Measurement
An unusual, transitioning Standard. IPSAS 41 (Financial Instruments) absorbed almost all of IPSAS 29's recognition and measurement content – paragraphs 1–79 (incl. the objective) are deleted – but paragraphs 80–126 survive as an OPTIONAL legacy hedge-accounting model: IPSAS 41 (para. 177) permits an entity to elect to continue applying IPSAS 29's hedge accounting. Effective 1 January 2013.
Active Standard
IPSAS 29 Financial Instruments: Recognition and Measurement is a transitional Standard. Following IPSAS 41's issuance (Aug 2018), paragraphs 1–79 were deleted and that content now lives in IPSAS 41. What survives – paragraphs 80–126 – is an OPTIONAL legacy hedge-accounting model that IPSAS 41 (para. 177) still permits an entity to elect. Effective 1 January 2013.
IPSAS 29 was the IPSASB's adaptation of IAS 39 Financial Instruments: Recognition and Measurement. Its broad recognition/measurement scope was retired wholesale when IPSAS 41 replaced it; the residual hedge-accounting paragraphs are retained only as a legacy option. The current Standard therefore covers ONLY the surviving hedge-accounting slice (paras. 80–126).
1
An Unusual Status – What's Deleted, What Remains
Neither fully live nor fully withdrawn
IPSAS 29 is unlike any other Standard in this library. When IPSAS 41, Financial Instruments, was issued in August 2018, it absorbed almost ALL of IPSAS 29's substantive recognition and measurement content – paragraphs 1 through 79 (initial recognition, classification, subsequent measurement, reclassification, derecognition, impairment) are now marked [Deleted] in the current Handbook. Even the OBJECTIVE paragraph itself (para. 1) is [Deleted].
What SURVIVES: paragraphs 80–126 – a narrow, OPTIONAL set of legacy HEDGE ACCOUNTING requirements. IPSAS 41 (para. 177) permits an entity to ELECT to continue applying IPSAS 29's hedge accounting model instead of adopting IPSAS 41's own hedge accounting requirements. This poster covers only that surviving, optional slice.
What moved where (para. 7)
Former IPSAS 29 topicNow in…
Initial recognition/classificationIPSAS 41 paras. 1–79
Subsequent measurementIPSAS 41 paras. 80–176
Derecognition/impairmentIPSAS 41 paras. 120–140
Legacy hedge accounting (opt.)IPSAS 29 paras. 80–126 (retained)
2
Scope – Applying the Legacy Hedge Accounting Option
Opt-in regime (para. 80)
An entity MAY elect – once, at the date it adopts IPSAS 41 – to apply IPSAS 29's hedge accounting model to some or all of its hedging relationships. The election is irrevocable without IPSASB consent; if elected, ALL the legacy conditions of IPSAS 29 (80–126) apply to the chosen hedges.
Irrevocable election pointAll legacy conditions must then be metIPSAS 41 para. 177 governs the option
3
Hedge Accounting – Qualifying Conditions
Must-clear test (para. 88)
A hedge is eligible for legacy accounting only if it is a fully designated relationship in which: (1) the hedge is of a recognized asset/liability or a firm commitment; (2) an economic relationship exists between the hedged risk and the hedging instrument; and (3) the hedge's effectiveness is formally documented and expected to be, and is, highly effective.
Formal designationEconomic relationshipHighly effective80–125% range
4
Fair Value Hedges
Fair value changes mirror (para. 96)
For a fair value hedge, the change in fair value of both the hedging instrument and the hedged item (attributable to the hedged risk) are recognised in profit or loss. The legacy model permits the straightforward offset approach.
The hedged item must be specifically identified and its risk hedged (no 'macro' hedging unless within an allowed portfolio fair value option).
5
Cash Flow Hedges
Effective portion to OCI (para. 100)
The effective portion of gains/losses on the cash flow hedging instrument is recognised in other comprehensive income (OCI) and accumulated in equity as a revaluation component, and reclassified to profit or loss when the hedged transaction affects profit or loss.
Cash flow hedge
A hedge of the exposure to variability in the cash flows of a recognised item or a firm commitment.
6
Hedges of a Net Investment in a Foreign Operation
Treat as equity-method (para. 108)
TreatmentPlacement
Effective portionOCI (foreign-currency translation reserve)
Ineffective portionProfit or loss – immediate
The legacy model retains the translation-of-foreign-operation approach (not IPSAS 41's more principles-based re-measurement).
7
Effective Date & Amendment Timeline
Timeline
DateEvent
Dec 2011Issued (full IAS 39 model)
1 Jan 2013Effective date
Aug 2018IPSAS 41 cuts paras. 1–79 ([Deleted])
2019Amended (latest, para. 177 option text)
The effective date (2013) predates the 2018 deletion – the surviving hedge content's effective date is unchanged.
8
Relationship to IAS 39
IAS 39 heritage (para. 120)
The retained paragraphs (80–126) are essentially unchanged from IAS 39's hedge-accounting model that IPSAS 29 originally adopted. IPSAS 41 introduces a newer, principles-based hedge model (paras. 177+) – entities electing the legacy route keep the IAS 39-based mechanics intact.
IAS 39 hedge effectivenessIPSAS 29 same (legacy)IAS 39 OCI recyclingIPSAS 29 sameIPSAS 41 hedge modelAlternative (non-legacy) path
9
Statement / Process Mapping
Where the option lives
ProcessLedger
Legacy election decisionFinance Policy → IPSAS 41 adoption memo
Hedge documentationTreasury Mgmt → Hedge Tracking DB
OCI recyclingEquity Roll → P&L on de-recognition
10
Related Standards
See also
StandardRelation
IPSAS 41Successor – recognition/measurement; para. 177 = the legacy election
IPSAS 28Presentation of FI
IAS 39Legacy hedge model origin
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Glossary
[Deleted]
Formerly authoritative paragraphs 1–79; now relocated to IPSAS 41.
Legacy election
Irrevocable opt to apply IPSAS 29's hedge model.
Highly effective
Hedge ratio 80–125%; formally documented.
Cash flow hedge
Hedge of cash-flow variability; effective part → OCI.
Fair value hedge
Hedge of fair-value risk; changes both sides → P&L.
Foreign operation
Operation with a currency other than its parent's.