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IFRS 7 Financial Instruments: Disclosures: Technical Summary

This document summarizes IFRS 7 Financial Instruments: Disclosures. IFRS 7 requires entities to provide disclosures that enable users to evaluate: (1) the significance of financial instruments for the entity's financial position and performance, and (2) the nature and extent of risks from financial instruments and how these risks are managed. Both qualitative and quantitative disclosures are required to provide an overview of the entity's use of financial instruments and the exposures created. IFRS 7 applies to all entities regardless of the number of financial instruments and requires disclosures to be grouped into appropriate classes.

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82 views1 page

IFRS 7 Financial Instruments: Disclosures: Technical Summary

This document summarizes IFRS 7 Financial Instruments: Disclosures. IFRS 7 requires entities to provide disclosures that enable users to evaluate: (1) the significance of financial instruments for the entity's financial position and performance, and (2) the nature and extent of risks from financial instruments and how these risks are managed. Both qualitative and quantitative disclosures are required to provide an overview of the entity's use of financial instruments and the exposures created. IFRS 7 applies to all entities regardless of the number of financial instruments and requires disclosures to be grouped into appropriate classes.

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Technical Summary

This extract has been prepared by IASC Foundation staff and has not been approved by the IASB.
For the requirements reference must be made to International Financial Reporting Standards.

IFRS 7 Financial Instruments: Disclosures


The objective of this IFRS is to require entities to provide disclosures in their
financial statements that enable users to evaluate:
(a) the significance of financial instruments for the entity’s financial position and
performance; and
(b) the nature and extent of risks arising from financial instruments to which the entity
is exposed during the period and at the end of the reporting period, and how the
entity manages those risks. The qualitative disclosures describe management’s
objectives, policies and processes for managing those risks. The quantitative
disclosures provide information about the extent to which the entity is exposed to
risk, based on information provided internally to the entity's key management
personnel. Together, these disclosures provide an overview of the entity's use of
financial instruments and the exposures to risks they create.

The IFRS applies to all entities, including entities that have few financial instruments
(eg a manufacturer whose only financial instruments are accounts receivable and
accounts payable) and those that have many financial instruments (eg a financial
institution most of whose assets and liabilities are financial instruments).

When this IFRS requires disclosures by class of financial instrument, an entity shall
group financial instruments into classes that are appropriate to the nature of the
information disclosed and that take into account the characteristics of those financial
instruments. An entity shall provide sufficient information to permit reconciliation to
the line items presented in the statement of financial position.

The principles in this IFRS complement the principles for recognising, measuring and
presenting financial assets and financial liabilities in IAS 32 Financial Instruments:
Presentation and IAS 39 Financial Instruments: Recognition and Measurement.

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