On 24 July 2014, the IASB issued the fourth and final version of its new standard on financial instruments accounting – IFRS 9 Financial Instruments.
On 24 July 2014, the IASB issued the final version of its new standard.
On 24 July 2014, the IASB issued the fourth and final version of its new standard on financial instruments accounting – IFRS 9 Financial Instruments with a mandatory effective date of 1 January 2018.
Challenges companies are facing:
The new standard will have a massive impact on how banks account for credit losses on their loan portfolios. Provisions for bad debts will be bigger and are likely to be more volatile, and adopting the new rules will require a lot of time, effort, and money. A major issue for banks and investors in banks will be how adoption of the new standard will affect regulatory capital ratios.
Insurers will also be significantly impacted by IFRS 9. The industry has to plan for the adoption of new standards on both financial instruments and insurance contracts over the next few years.
Other corporates should not automatically assume the impact of the classification, measurement and impairment requirements of the new standard will be small, as this depends on the exposures they have and how they manage them. Planning for IFRS 9 adoption is likely to be an important issue for corporate treasurers and accountants generally.
How can we help?
IFRS 9 is more than just accounting change; it will have far reaching impacts on your systems & processes, your business and your people. Thanks to its Global IFRS Institute, KPMG has the necessary expertise to guide you through this accounting transformation.
Contact us to talk more about how KPMG can help you determine your most critical IFRS 9 challenges and evaluate your readiness.
KPMG has developed a powerful software application – Global Credit Loss Accounting Solution (gCLAS) – designed to help financial institutions cut through the complexity of IFRS 9 compliance by automating the necessary functions for expected credit loss (ECL) modelling, accounting and reporting for the measurement and recognition of asset impairment.
Koen De Loose