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FINANCIAL INSTRUMENTS: DISCLOSURE REQUIREMENTS

AND HOW THEY ARE MET IN THE PROFORMA IFRS NHS TRUST ACCOUNTS

Why are disclosures required?

The disclosure requirements for financial instruments are in IFRS 7.  The objective of IFRS 7 is to ensure disclosures of:

● the significance of financial instruments for the body’s financial position and performance, and

● the nature and extent of risks arising from financial instruments, during the period and at the reporting date, and how they are managed.

Which balances are covered by the disclosure requirements?

The disclosure requirements apply to all financial instruments except interests in subsidiaries, associates and joint ventures and employers’ rights and obligations under employee benefit plans.  They therefore apply to financial instruments that are measured under other standards eg finance leases and PFI.

Do I have to give all the disclosures?

The extent of disclosure required depends on the extent of use of financial instruments and of exposure to risk (IFRS 7.IN4).  NHS bodies are not expected to make much use of financial instruments nor be exposed to significant risk.  The table, below, therefore shows some entries as ‘unlikely to arise’, or similar, and no provision has been made for those disclosures in the proforma accounts.  If, unusually, an NHS trust does meet these circumstances, the disclosures will be required.  Conversely where provision is made in the proforma accounts for a particular disclosure, some bodies will find that they do not need to use it.  IFRS 7.IG3 reiterates that a disclosure requirement need not be satisfied if the information is not material.

What is a class of financial instrument?

When the IFRS requires disclosures by class of financial instrument, if necessary, you should choose classes according to the type of information being disclosed and the characteristics of the financial instruments.  Sufficient information should be given to allow reconciliation to the line items in the statement of financial position (IFRS 7.6).

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