IFRS 7

IFRS 7 requires entities to provide disclosures in their financial statements that enable users to evaluate:

  • the significance of financial instruments for the entity’s financial position and performance.
  • 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.

IFRS 7 applies to all entities, including entities that have few financial instruments (for example, a manufacturer whose only financial instruments are cash, accounts receivable, and accounts payable) and those that have many financial instruments (for example, a financial institution most of whose assets and liabilities are financial instruments).

What is IFRS 7 Explain it?


IFRS 7 requires entities to provide disclosures in their financial statements that enable users to evaluate: … 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.

Does IFRS 9 replace IFRS 7?


IFRS 9 amends some of the requirements of IFRS 7 Financial Instruments: Disclosures including adding disclosures about investments in equity instruments designated as at FVTOCI, disclosures on risk management activities, and hedge accounting and disclosures on credit risk management and impairment.

What is the scope of IFRS 7?

The objective of IFRS 7 is to provide more transparency to financial statement users on an entity’s exposure to risks and how those risks are managed. An entity must group its financial instruments into classes of similar instruments and, when disclosures are required, make disclosures by class.