IASB defers effective date of IFRS 9 and publishes modified transition disclosures
16 Dec 2011
The IASB has published amendments that defer the mandatory effective date of both the 2009 and 2010 versions of IFRS 9 'Financial Instruments' to annual periods beginning on or after 1 January 2015.
Prior to the amendments, IFRS 9 was mandatorily effective for annual periods beginning on or after 1 January 2013. Early application is still permitted.
Instead of requiring restatement of comparative financial statements, entities are either permitted or required to provide modified disclosures on transition from IAS 39 to IFRS 9 on the basis of the entity's date of adoption and if the entity chooses to restate prior periods. An entity that adopts IFRS 9 for reporting periods:
- beginning before 1 January 2012 is not required to restate prior periods or provide the modified disclosures
- beginning from 1 January 2012 until 31 December 2012 may elect to either restate its prior periods or provide the modified disclosures
- beginning on 1 January 2013 or thereafter is not required to restate prior periods but is required to provide the modified disclosures.
Much of the information required in the modified disclosures is consistent with existing disclosures in IAS 8 and IFRS 7. However, the amendments also require reclassification disclosures in IFRS 7 (as amended by IFRS 9 (2009)) on transition from IAS 39 to IFRS 9 regardless as to whether they would normally be required due to a change in business model. Reclassification disclosures and other disclosures required when initially applying IFRS 9 are expected to allow reconciliations between the measurement categories in accordance with IAS 39 and IFRS 9 and individual line items in the financial statements or classes of financial instruments.
The IASB is deferring the mandatory effective date of IFRS 9 because of the delay in the expected timing of completion of the remaining phases of the financial instruments project. The Board intends to allow entities to apply all phases of the financial instruments project concurrently. Also, the Board considered the effective date of the standard on insurance contracts which is currently being developed. Furthermore, at its November 2011 meeting, the IASB tentatively decided to re-open IFRS 9 to address potential application issues in IFRS 9 and consider the interaction between IFRS 9 and the tentative decisions made on the insurance project. Additionally, the IASB will consider the FASB's model on the classification and measurement of financial instruments.