IASB member discusses financial instruments

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24 Apr, 2015

In a report issued by the ‘Banking magazine: Association of Banks in Israel’, IASB member Sue Lloyd talks about IFRS 9, specifically looking at the new loan loss accounting model.

Ms Lloyd began by stating the reasons why IFRS 9 is an improvement over IAS 39, such as combining all aspects of financial instruments accounting into one standard and enhanced disclosures. Next, she describes the loan model under IFRS 9 which requires “financial institutions and other companies to estimate and account for expected credit losses from when they first lend money or invest in a financial instrument.” She notes that although the IASB and FASB have worked together to create a converged model, the FASB has taken a different approach. Lastly, she comments that the implementation of the expected loss model for loan loss provisions will require significant changes to financial institutions and other companies' systems and processes, which is the reason why the IASB set the mandatory effective date to 1 January 2018.

For more in­for­ma­tion, see the report on the IASB’s website.

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