IASB publishes second request for information on the post-implementation review of IFRS 9
30 May, 2023
The International Accounting Standards Board (IASB) has issued a request for information (RFI) seeking comments from stakeholders to identify whether the impairment requirements in IFRS 9 'Financial Instruments' provide information that is useful to users of financial statements; whether there are requirements that are difficult to implement and may prevent the consistent implementation of the standard; and whether unexpected costs have arisen in connection with applying or enforcing the standard.
The IASB has decided that while reviewing IFRS 9 in its entirety, it will do so in three parts:
- In 2022, the IASB completed its review of the classification and measurement requirements, concluding that these requirements are working as intended.
- With the request for information published today, the IASB is seeking feedback on the impairment requirements.
- The IASB will seek feedback separately on the hedge accounting requirements.
The post-implementation review process for the impairment requirements in IFRS 9 was officially taken up in July 2022. From September 2022 – February 2023, the IASB conducted outreach to ask stakeholders what matters the IASB should examine within the context of the objectives of the post-implementation review (PIR).
After discussing feedback from outreach, the Board decided in February 2023 to examine further:
- the general approach to recognition of expected credit losses (ECL),
- significant increases in credit risk,
- the measurement of ECL,
- the prevalence of particular questions from entities on how to apply the ECL requirements to purchased or originated credit-impaired financial assets,
- the simplified approach to recognition of ECL for trade receivables, contract assets and lease receivables,
- the accounting for loan commitments, collateral and other credit enhancements held, and issued financial guarantee contracts that are in scope of IFRS 9,
- the application of the ECL requirements alongside other requirements in IFRS 9 or in other IFRS Accounting Standards,
- the effects of transition reliefs provided by the IASB and the balance between reducing costs for preparers of financial statements and providing useful information to users of financial statements, and
- the disclosure requirements for credit risk in IFRS 7.
Accordingly, the RFI is structured into the following sections:
| Impairment — overall assessment |
Asks whether the impairment requirements in IFRS 9 result in a more timely recognition of credit losses compared to IAS 39 and address the complexity caused by having multiple impairment models for financial instruments and in an entity providing useful information to users of financial statements about the effect of credit risk on the amount, timing and uncertainty of future cash flows. |
| General approach |
Asks whether there are fatal flaws regarding the general approach and whether its costs of applying are significantly greater than expected/ benefits to users significantly lower than expected. |
| Determining significant increases in credit risk | Asks whether there are fatal flaws regarding the assessment of significant increases in credit risk and whether the assessment of significant increases in credit risk can be applied consistently. |
| Measuring expected credit losses | Asks whether there are fatal flaws regarding the requirements for measuring expected credit losses and whether the measurement requirements can be applied consistently. |
| Purchased or originated credit-impaired financial assets | Asks whether the requirements in IFRS 9 for purchased or originated credit-impaired financial assets can be applied consistently. |
| Simplified approach for trade receivables, contract assets and lease receivables | Asks whether there are fatal flaws regarding the simplified approach and whether its costs of applying are significantly greater than expected/ benefits to users significantly lower than expected. |
| Application of the impairment requirements in IFRS 9 with other requirements | Asks whether it is clear how to apply the impairment requirements in IFRS 9 with other requirements in IFRS 9 or with the requirements in other IFRSs. |
| Transition | Asks whether the costs of applying the transition requirements and auditing and enforcing their application are significantly greater than expected/ benefits to users significantly lower than expected. |
| Credit risk disclosures | Asks whether there are fatal flaws regarding the disclosure requirements in IFRS 7 for credit risk and whether their costs of applying are significantly greater than expected/ benefits to users significantly lower than expected. |
| Other matters | Asks whether there any other matters that the Board should examine as part of the PIR of the impairment requirements of IFRS 9 and whether there are lessons to be learned from the Board’s approach to developing the requirements in respect of understandability and accessibility. |
Comments on the RFI are requested by 27 September 2023. The request for information and a corresponding press release are available on the IASB website. There is also a short video with IASB Board member Zach Gast explaining the RFI. Our related Need to know publication is available here.
