EFRAG considers that the impairment requirements in IFRS 9 generally work as intended and that the use of a forward-looking expected credit loss model results in more timely recognition of credit losses than applying IAS 39 Financial Instruments: Recognition and Measurement.

Nevertheless, EFRAG identifies some issues of application or diversity in practice with different levels of priority that should be further considered by the IASB in the context of this project.  These include:

• cash shortfalls used to measure expected credit losses; and 
• the interaction between modification, impairment, and derecognition requirements.

EFRAG also considers that more guidance in the form of illustrative examples and/or educational material would enhance the quality and comparability of credit risk disclosures.

Finally EFRAG recommends that the IASB considers other areas with a medium priority such as intra-group loans and guarantees, collective assessment of significant increases in credit risk, loan commitments, financial guarantees and other credit enhancements and purchased or originated credit impaired asset requirements.

The press release and the final comment letter are available on the EFRAG website.