IFRS 9 vs ASC 815: hedge accounting

Hedge accounting is optional under both frameworks, but companies that hedge commodities, currencies or interest rates rely on it to keep derivative gains and losses from swinging their profits. The two models have moved closer since ASU 2017-12 and ASU 2025-09, but they still produce different balance sheets and different ineffectiveness. This guide compares IFRS 9 with ASC 815 side by side, reworks the ASC 815 guide's oil hedge under IFRS, and covers effectiveness testing, risk components, costs of hedging, macro hedging and what is changing.

By Mirza Fahad Baig, Chartered Accountant (ICAP). Reviewed by Hamza Fida, Chartered Accountant (ICAP). Updated . 7 minute read.

Short answer

IFRS 9 vs ASC 815 compares two hedge accounting models built on the same three hedge types: fair value hedges, cash flow hedges and hedges of a net investment in a foreign operation. Both require formal designation and documentation at inception, and both defer gains and losses on a cash flow hedge in other comprehensive income until the hedged transaction affects profit or loss. IFRS 9 ties hedge accounting more closely to risk management: there is no 80% to 125% effectiveness range, the hedge ratio can be rebalanced, and a hedge cannot be voluntarily de-designated while the risk management objective is unchanged. US GAAP requires a highly effective hedge, allows de-designation at any time and offers the shortcut method. In a cash flow hedge, IFRS measures ineffectiveness and records it in profit or loss, while US GAAP puts the whole change in the hedging instrument in other comprehensive income. When a hedged purchase of inventory happens, IFRS adjusts the inventory's cost by the hedge gain or loss, a basis adjustment; US GAAP leaves it in accumulated other comprehensive income until the inventory is sold. In this guide's example, the same hedged oil is carried at CU 700,000 under IFRS and CU 790,000 under US GAAP.

At a glance

Philosophy
Risk management vs rules
Effectiveness
No 80% to 125% in IFRS
Basis adjustment
IFRS only
Ineffectiveness
Measured only in IFRS
De-designation
Voluntary in US
Shortcut method
US GAAP only
IFRS 9 vs ASC 815: hedge accountingPhilosophy: Risk management vs rules; Effectiveness: No 80% to 125% in IFRS; Basis adjustment: IFRS only; Ineffectiveness: Measured only in IFRS; De-designation: Voluntary in US; Shortcut method: US GAAP only.KEY FACTS AT A GLANCEIFRS 9 vs ASC 815: hedge accountingPhilosophyRisk management vs rulesEffectivenessNo 80% to 125% in IFRSBasis adjustmentIFRS onlyIneffectivenessMeasured only in IFRSDe-designationVoluntary in USShortcut methodUS GAAP onlyTax BakersIFRS 9 vs ASC 815: hedge accountingPhilosophy: Risk management vs rules; Effectiveness: No 80% to 125% in IFRS; Basis adjustment: IFRS only; Ineffectiveness: Measured only in IFRS; De-designation: Voluntary in US; Shortcut method: US GAAP only.KEY FACTS AT A GLANCEIFRS 9 vs ASC 815: hedgeaccountingPhilosophyRisk management vs rulesEffectivenessNo 80% to 125% in IFRSBasis adjustmentIFRS onlyIneffectivenessMeasured only in IFRSDe-designationVoluntary in USShortcut methodUS GAAP onlyTax Bakers
Key facts at a glance, as set out in this guide.

What do IFRS 9 and ASC 815 have in common?

Both allow fair value hedges, cash flow hedges and net investment hedges; both require the hedging relationship, the risk management objective, the hedged item, the hedging instrument and the method of assessing effectiveness to be documented at inception; both carry derivatives at fair value; and both send the effective part of a cash flow hedge to other comprehensive income and reclassify it when the hedged item affects profit or loss. Both allow a risk component of a financial item, such as a benchmark interest rate, to be hedged. See IFRS 9 hedge accounting and ASC 815 derivatives and hedging.

IFRS 9 vs ASC 815: what are the differences?

IFRS 9 vs ASC 815 at a glanceIFRS 9 vs ASC 815 at a glanceTOPICIFRSUS GAAP80% to 125% effectiveness rangeNot requiredRequiredVoluntary de-designationNot allowedAllowedRebalance the hedge ratioAllowedNot allowedBasis adjustment to inventoryRequiredNot allowedShortcut methodNot allowedAllowed
Same hedge types; IFRS 9 follows risk management, US GAAP sets rules.
AreaIFRS 9ASC 815
Effectiveness requirementAn economic relationship, credit risk not dominating, and a hedge ratio consistent with risk management; no bright lineHighly effective, in practice 80% to 125%; a quantitative test at inception unless the shortcut or a critical terms match applies, then qualitative tests are allowed
Ineffectiveness in a cash flow hedgeMeasured: the excess of the instrument's change over the hedged item's goes to profit or lossNot measured separately: the whole change in a highly effective instrument goes to other comprehensive income
Hedged purchase of a nonfinancial itemBasis adjustment: the reserve is removed and included in the item's costStays in accumulated other comprehensive income until the item affects earnings
Ending a hedgeOnly when the qualifying criteria are no longer met; voluntary de-designation is not allowedAllowed at any time
Changing the hedge ratioRebalancing without ending the hedgeNo rebalancing; the hedge is de-designated and a new one designated
Shortcut methodNoneAvailable for some interest rate swaps, assuming perfect effectiveness
Risk components of nonfinancial itemsAllowed if separately identifiable and reliably measurableContractually specified components; from 2027 under ASU 2025-09, also pricing components not specified in the contract for forecasted transactions
Aggregated exposures and net positionsA combination of an exposure and a derivative can be hedged, and some net positionsA derivative cannot be a hedged item; designation is gross, with the portfolio layer method for prepayable assets
Time value of options and forward pointsCan be treated as a cost of hedging through other comprehensive incomeExcluded components recognized in earnings on a systematic basis or at fair value
Equity investments with gains in other comprehensive incomeCan be hedged items in a fair value hedgeNo equivalent, because equity securities are measured at fair value through net income
Macro hedgingIAS 39 portfolio hedge accounting may continue, and a company can keep IAS 39 for all its hedgesPortfolio layer method, from ASU 2022-01

An example: the oil hedge from the ASC 815 guide under IFRS

A manufacturer hedges a forecasted purchase of 10,000 barrels of oil with a forward at CU 70 a barrel, designated as a cash flow hedge. At the year end the forward price is CU 76; when the oil is bought at a spot price of CU 79, the forward has gained CU 90,000 in total. The oil is still in inventory at the next quarter end. All figures are in CU.

After the purchase, before the oil is usedIFRS 9ASC 815
Inventory700,000: 790,000 less the 90,000 hedge gain790,000 at the spot price
Hedge gain held in equityNil, moved into the inventory's cost90,000 in accumulated other comprehensive income
Cost of sales when the oil is used700,000790,000 less 90,000 reclassified, so 700,000
If the hedged purchase had moved by only 85,0005,000 of ineffectiveness in profit or loss at onceAll 90,000 in other comprehensive income, if highly effective

Cost of sales ends up at the hedged price of CU 70 a barrel under both, and profit over the whole life of the hedge is the same. The balance sheet in between differs, which matters for inventory covenants and ratios, and so does the timing of ineffectiveness: IFRS 9 recognizes an over-hedge immediately, while US GAAP waits until the oil is used.

What is changing?

ASU 2025-09, effective for public business entities from 2027 and others from 2028, eases US hedge accounting for groups of forecasted transactions, choose-your-rate debt and nonfinancial pricing components, narrowing the gap with IFRS 9. The IASB published its Risk Mitigation Accounting exposure draft in December 2025, a new model for repricing interest rate risk managed on a net basis, and in September 2026 a Request for Information for its post-implementation review of IFRS 9 hedge accounting, with comments due by January 26, 2027.

Where to go next

See IFRS vs US GAAP key differences, IFRS 9 vs US GAAP classification and IAS 21 vs ASC 830.

Keep going

Our free Excel models work through the examples in these guides, and the comparisons show where IFRS and US GAAP part ways. Every guide names the Chartered Accountant who wrote it and the one who reviewed it.

All IFRS vs US GAAP guides Free Excel models

Questions people ask

What is the main difference between IFRS 9 and ASC 815 hedge accounting?

IFRS 9 has no 80% to 125% effectiveness range, allows rebalancing, prohibits voluntary de-designation and measures cash flow hedge ineffectiveness, while US GAAP requires a highly effective hedge, allows de-designation at any time and offers the shortcut method.

What is a basis adjustment?

Under IFRS 9, when a hedged forecasted purchase of a nonfinancial item such as inventory occurs, the gain or loss in the cash flow hedge reserve is included in the item's cost. US GAAP does not do this; the amount stays in accumulated other comprehensive income until the item affects earnings.

Is hedge ineffectiveness recognized under US GAAP?

Not separately for cash flow hedges: since ASU 2017-12, the whole change in fair value of a highly effective hedging instrument is recorded in other comprehensive income and reclassified when the hedged item affects earnings.

Can a company still use IAS 39 hedge accounting?

Yes. IFRS 9 lets a company choose to continue applying IAS 39's hedge accounting requirements until the IASB completes its macro hedging project.

Sources

The standards, updates and other documents this guide draws on.

  1. IFRS Foundation: IFRS 9 Financial Instruments
  2. FASB Accounting Standards Codification: Topic 815, Derivatives and Hedging
  3. KPMG US: Hedge accounting, how is IFRS 9 different from ASC 815?
  4. RSM US: FASB issues ASU on hedge accounting improvements (ASU 2025-09)
  5. BDO: IASB publishes Exposure Draft, Risk Mitigation Accounting, December 2025
  6. IFRS Foundation: Request for Information, Post-implementation Review of IFRS 9 and IFRS 7, Hedge Accounting Requirements, September 2026

Rules and fees change. If you are reading this long after October 26, 2026, confirm the figures with the source before you rely on them.

IFRS 9Hedge accounting basics under IFRS 9ASC 815ASC 815 derivatives and hedging explainedAccounting standardsIFRS vs US GAAP: the key differences in one guide

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