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IFRS news, April 2020

A focus on IFRS 9 expected credit losses for corporate entities

COVID-19 will impact many areas of accounting and reporting for all industries, as outlined in our publication "In depth: Accounting Implications of the Effects of Coronavirus". The IASB issued a short document on IFRS 9 and COVID-19 in March 2020. Regulatory authorities have also provided additional guidance for financial institutions. But companies in all industries are facing additional working capital pressure and a likely increase in the credit risk of their receivables. In this Spotlight we focus on the implications for corporate entities (that is, non-financial institutions) when measuring expected credit losses (ECL) on trade receivables, contract assets, lease receivables, intercompany loans and any other financial assets subject to IFRS 9’s ECL requirements.

A banking industry focus on IFRS 9 expected credit losses

The COVID-19 pandemic has had and will continue to have far-reaching implications. In many parts of the world, governments have brought in never-before-seen measures including mass quarantines, social distancing, border closures, shut-downs of non-essential services and considerable (in some cases, unlimited) commitments to provide financial support to affected businesses and individuals. Just as the medical implications are emerging and evolving at breakneck speed, so too are those related to the economic and credit environment. COVID-19 will impact many areas of accounting and reporting for all industries, as outlined in our publication In depth: Accounting Implications of the Effects of Coronavirus. For banks, additional challenges are likely to arise. In this Spotlight we provide our insights into what we believe to be the Top 5 issues for banks.

A look at current financial reporting issues

IFRS 16 accounting and disclosures – What to look out for

This applies to all entities that apply IFRS 16, ‘Leases’. Transitioning to a new accounting standard is not straightforward. With the introduction of IFRS 16, there are several accounting and disclosure considerations which need to be taken into account. Below are some common mistakes to look out for and questions to ask yourself when you are assessing IFRS 16 accounting and disclosures.

Translation of hyperinflationary foreign operations (IAS 29/IAS 21) – In brief

The IFRS Interpretations Committee (IC) received a request asking: (1) how an entity with a non-hyperinflationary presentation currency should present differences that arise on restating and translating the opening financial position of a hyperinflationary foreign operation; and (2) whether the foreign currency translation reserve should be reclassified when a foreign operation becomes hyperinflationary.


In this issue

A focus on IFRS 9 expected credit losses for corporate entities
  • Key messages in the IASB document
  •  Implications for trade receivables, lease receivables and contract assets measured using the simplified approach
  •  Interim reporting under IAS 34 and other disclosure considerations
  •  Measuring and presenting expected credit losses (ECLs) – reminder of the core principles and implications of the changing environment
  • Loan receivables, including intercompany balances and other assets not measured using the simplified approach – identifying significant increases in credit risk (SICR)
A banking industry focus on IFRS 9 expected credit losses
  • Measuring expected credit losses (ECLs)
  • Identifying significant increases in credit risk (SICR)
  • Modifications and forbearance
  • Interim reporting under IAS 34 and other disclosure considerations
  • Government relief programmes
A look at current financial reporting issues
  • What are the issues? 
  • What is the impact and for whom?
  • Which entities does these guidance apply to?
  • When does it apply?

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Kyriaki Plastira

Partner, PwC Greece

Tel: +30 210 6874425

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