Post-implementation review — IFRS 9 (Impairment)
Background
The IASB carries out a post-implementation review of each new IFRS or major amendment. This is normally carried out two years after the new requirements have become mandatory and been implemented.
The objectives of a post-implementation review, according to the IASB's Due Process Handbook, are:
- to review the important issues that had been identified as contentious during the development of the pronouncement
- to consider any unexpected costs or implementation problems that have been encountered.
This page covers the second part of the IASB's post-implementation review of IFRS 9 Financial Instruments. In October 2020, the IASB decided to take up a post-implementation review (PIR) of IFRS 9, but to separate it into several PIRs. The PIR on classification and measurement was started right away, the PIR on impairment was first discussed in July 2022.
Core model for the impairment accounting requirements is the so-called "expected credit loss" impairment model that addresses the delayed recognition of credit losses applying the impairment model in IAS 39 Financial Instruments: Recognition and Measurement.
Current status of the project
This project has been completed.
After analysing the evidence gathered in the PIR, the IASB concluded that the impairment requirements in IFRS 9 are working as intended. The project summary and feedback statement notes in particular the following conclusions:
- There are no fundamental questions (fatal flaws) about the clarity or suitability of the core objectives or principles in the requirements.
- In general, the requirements can be applied consistently. However, further clarification and application guidance is needed in some areas to support greater consistency in application.
- The benefits to users of financial statements from the information arising from applying the impairment requirements in IFRS 9 are not significantly lower than expected. However, targeted improvements to the disclosure requirements about credit risk are needed to enhance the usefulness of information for users.
- The costs of applying the impairment requirements and auditing and enforcing their application are not significantly greater than expected.
Consequently, the IASB made the following decisions:
- The IASB will add to its research pipeline a project to consider targeted improvements to specific disclosure requirements in IFRS 7 about credit risk.
- The IASB will consider matters that arise from the intersection of the impairment requirements and the requirements for the modification, derecognition and write-off of financial assets in IFRS 9 as part of the project on amortised cost measurement that is already in the research pipeline.
- The IASB will consider the matters relating to accounting for financial guarantee contracts during the next agenda consultation.
- The IASB will take no further action on the other matters identified in the PIR.
Project milestones
| Date | Development | Comments |
|---|---|---|
| July 2022 | Project first discussed by the IASB | The next expected project step is a request for information to be published in H1 2023. |
| 30 May 2023 | Request for information was published | Comments requested by 27 September 2023 |
| 4 July 2024 | Project Summary and Feedback Statement: Post-implementation Review IFRS 9 'Financial Instruments' — Impairment published | The Board concluded that the standard works as intended and provides useful information to users of financial instruments. However, two smaller aspects were added to the research pipeline and one will be considered during the next agenda consultation. |
