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IFRS 9 Financial Instruments implementation
Nov 18, 2016

The effective date of IFRS 9 Financial Instruments is periods commencing on or after 1 January 2018. Entities that report under IFRS should now be thinking about their transition to the new standard. The definition of “financial instrument” is broad and it is fallacy to think that IFRS only applies to “complex” instruments or to entities that are “financial institutions.” All entities have financial instruments such as bank balances, receivables, payables and sources of finance such as loans and overdrafts. Therefore all entities have financial instruments and have to apply IFRS 9.

We have prepared a short recording introducing IFRS 9. It is available here.

The International Accounting Standards Board (IASB) has issued a webcast, available at http://bit.ly/2azTfnl that looks at incorporating forward-looking information in the application of the Expected Credit Loss impairment requirements. This is a complex aspect of IFRS that the webcast seeks to explain. The webcast covers the following:

  • When multiple scenarios are relevant and the concept of non-linearity;
  • Consistency of scenarios;
  • Probability-weighted assessment of significant increase in credit risk; and
  • Approaches to incorporating forward-looking scenarios.

Crowe Horwath International is preparing a resource for testing Expected Credit Loss impairments. We shall announce more details about this resource in early 2017.