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Financial instruments – Effective date of IFRS 9

Date recorded:

At the 22 July 2011 Board meeting, the IASB tentatively decided to delay the mandatory effective date for IFRS 9 to annual periods beginning on or after 1 January 2015 and to issue the proposal in an exposure draft with a 60 day comment period.

The staff raised what they viewed as sweep issues to the Board in order to have it also included in the IFRS 9 amendment exposure draft. Those issues focused on the relief period for comparative financial statements and clarification of the term 'reporting period'. The rational for the relief for providing comparative information upon adoption for reporting periods beginning prior to 1 January 2012 was an attempt to strike a balance between the preferable approach of full retrospective application and the practicability of implementing a new standard in a short period of time.

The staff believes that the Board's initial reason for providing the comparative relief is not impacted by the decision to delay the mandatory effective date and therefore there should be no change made to the provisions for comparative periods.

Additionally, questions have arisen regarding the term 'reporting period' as used in the early application provisions as to whether that means an annual reporting period or whether IFRS 9 could be early applied at the beginning of an interim period after an annual period has commenced. The staff also believes it was the Board's original intention that early application could be applied at the beginning of an interim or an annual reporting period.

One of the IASB members acknowledged that he joined the Board since the original issuance of IFRS 9 but did not support permitting application of new standards during interim reporting periods as it was contradictory to IAS 34. Another Board member raised the issue of how such a clarification could be interpreted with other recently issued standards highlighting they often refer only to a period' in the effective date guidance.

The staff acknowledged the potential issue regarding clarification of the term reporting period' and its impact to other standards and therefore suggested the Board delay that topic and instead only consider the comparative period relief issue for the pending exposure draft on IFRS 9. The Board tentatively decided [in a 8-0 vote] to retain the relief for comparative period upon early application of IFRS 9 to reporting periods beginning before 1 January 2012.