IFRS 9

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On 24 July 2014, the IASB published the complete version of IFRS 9 – Financial Instruments standard, which replaces the guidance of previous Financial Instruments standard (IAS 39). Applying the new standard will represent one of the significant challenges for the banks, considering the adoption of IFRS as well. The thought is wrong that the new standard concerns only the financial institutes. The recognition rules of the impairment of the trade receivables will change significantly as well due to the ‘expected credit loss’ model determined by IFRS 9 – Financial Instruments standard.

We will provide regular updates on the interpretation and application of the new standard.

IFRS 9 impairment intercompany loans in separate financial statements

IFRS 9 impairment intercompany loans in separate financial statements

IFRS 9 introduces an ‘expected loss’ model for recognising impairment of financial assets held at amortised cost, including most inter-company loans receivable. This change of approach will require lenders of inter-company loans to consider forward-looking information to calculate expected credit losses, regardless of whether there has been an impairment trigger. In some cases, impairment losses might be recognised where none were previously.

IFRS 9 - Practical Insights for Corporates

IFRS 9 - Practical Insights for Corporates

The new financial instruments standard, IFRS 9, reduces the constraints associated with hedge accounting, allows more types of hedging relationships and helps reduce income statement volatility. Not surprisingly, a number of corporates are evaluating the new hedging requirements to take advantage of these benefits. There are, however, a number of other new requirements that Corporate companies need to consider. This publication looks at the benefits of IFRS 9 for Corporate companies for hedging and provides some insights into the impairment and classification and measurement guidelines in the new standard.

The implementation of IFRS 9 impairment requirements by banks

The implementation of IFRS 9 impairment requirements by banks

The Global Public Policy Committee (GPPC) is the global forum of representatives from the six largest international accounting networks - BDO, Deloitte, EY, Grant Thornton, KPMG and PwC. On 17 June 2016, the GPPC published a paper providing practical assistance to banks implementing the new impairment requirements, with the aim of promoting the implementation of accounting for expected credit losses to a high standard. For many banks, the adoption of expected credit loss accounting will be the most significant accounting change they have experienced, even more significant than their transition to IFRSs.

Getting governance right on IFRS 9 Expected Credit Loss: accounting policy and implementation decisions

Getting governance right on IFRS 9 Expected Credit Loss: accounting policy and implementation decisions

Governance processes and controls are an essential part of any bank’s control environment. They will be particularly critical for banks implementing IFRS 9 Expected Credit Loss (ECL) and making key decisions on accounting policies and how practically to implement the new impairment requirements. The importance of strong governance is further reinforced by the draft Basel Guidance, which emphasises the need for a robust and high quality implementation. This publication outlines some of the key governance challenges we have seen in practice when making IFRS 9 ECL accounting policy and implementation decisions, as well as how best to respond. Although primarily focused on banks, many of the areas discussed will also be relevant to other financial institutions implementing IFRS 9 ECL.

IFRS 9 Expected credit loss disclosures for banking

IFRS 9 Expected credit loss disclosures for banking

IFRS 9 introduces significant additional disclosure requirements relating to credit risk and expected credit loss allowances. Understanding the data and systems needed to meet these new requirements will be critical to ensuring the completeness of IFRS 9 project scopes, thereby avoiding revisions later in the project that could be costly and jeopardise project timings. Simply replicating the illustrative disclosures included in IFRS 9 risks missing key information requirements. Considering these disclosure requirements as part of the broader consideration of internal management reporting and investor communications will also likely deliver significant benefits. This publication sets out key considerations and what they will mean in practice.

IFRS 9: Classificationand measurement

IFRS 9: Classificationand measurement

On 24 July 2014, the IASB published the complete version of IFRS 9 Financial Instruments, which replaces most of the guidance in IAS 39. This includes amended guidance for the classification and measurement of financial assets by introducing a fair value through other comprehensive income category for certain debt instruments. It also contains a new impairment model which will result in earlier recognition of losses. No changes were introduced for the classification and measurement of financial liabilities, except for the recognition of changes in own credit risk in other comprehensive income for liabilities designated at fair value through profit or loss. It also includes the new hedging guidance that was issued in November 2013. These changes are likely to have a significant impact on entities that have significant financial assets and in particular financial institutions. IFRS 9 will be effective for annual periods beginning on or after 1 January 2018, subject to endorsement in certain territories. Current publication considers the changes to classification and measurement of financial assets.

There is a common perception that IFRS 9 Financial Instruments will not have a big impact on Corporates - in this video series, we will highlight why we think that perception is wrong!

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Gábor Balázs

Gábor Balázs

Partner, PwC Hungary

Maria Williams

Maria Williams

Director, PwC Hungary

Miklós Novák

Miklós Novák

Director, PwC Hungary

Gábor Halmosi

Gábor Halmosi

Director, PwC Hungary

Roland Balogh

Roland Balogh

Senior Manager, PwC Hungary

Péter Heronyányi

Péter Heronyányi

Senior Manager, PwC Hungary

Enikő Könczöl

Enikő Könczöl

Partner, PwC Hungary

Ildikó Mészáros

Ildikó Mészáros

Manager, PwC Hungary

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