Contrary to widespread belief, IFRS 9 affects more than just financial institutions
International Financial Reporting Standard 9 (IFRS 9) responds to criticisms that International Accounting Standard 39 (IAS 39) is too complex, is inconsistent with the way entities manage their businesses and risks, and defers the recognition of credit losses on loans and receivables until too late in the credit cycle.
The new standard is effective for years beginning on or after January 1, 2018, with earlier adoption permitted. Entities whose predominate activities are insurance-related can delay implementation until 2021.
The International Accounting Standards Board developed IFRS 9 in three phases, dealing separately with the classification and measurement of financial assets, impairment and hedging.
- Chris Wood, Partner, Accounting Advisory Services, Toronto
Ultimately, the question of how an entity is affected by IFRS 9 is that “it depends.” Some entities may find that classification and measurement of their financial assets will be substantially the same as they are currently under IAS 39 and that their impairment allowances may not be affected materially. Others will change substantially.
We can help you re-evaluate your accounting policies, financial statement note disclosures and other areas affected by the new requirements. We can also help you identify changes to your accounting systems and internal controls.