ED 62 Financial Instruments is based on IFRS 9, Financial Instruments and is intended to replace IPSAS 29 Financial Instruments: Recognition and Measurement, which is based on IAS 39. The new standard will introduce simplified classification and measurement requirements for financial assets, a forward looking impairment model, and a flexible hedge accounting model. Consistent with the relief provided in IFRS 9, the IPSASB proposes to allow an option for entities to continue to apply the IPSAS 29 hedging requirements.

The IPSASB applied its process for reviewing and modifying IASB documents to the requirements in IFRS 9 with the aim of keeping public sector requirements as closely as possible in line with IFRS while also including appropriate public sector specific modifications where necessary. Therefore, ED 62 includes public sector specific guidance on financial guarantees issued through non-exchange transactions and concessionary loans and examples illustrating how to apply the principles in ED 62 to transactions that are unique to the public sector.

In view of the significant changes proposed, the IPSASB intends to provide a three year implementation period for the new standard. Early adoption will be permitted.

Comments are requested by December 31, 2017.

Review the press release on the IPSASB's website. The IPSASB's consultation page offers access to the ED and comprehensive background material, including a comparison between the requirements in IFRS 9 and those in ED 62.