IFRS 9, the new International Financial Reporting Standard, will replace IAS 39 when it comes into effect in January 2018. IFRS 9 was issued in July 2014, following several years of revision and negotiation between the Financial Accounting Standards Board and International Accounting Standards Board.
During the financial crisis of 07/08, IAS 39 drew a lot of criticism due to it causing a delayed recognition of credit losses on loans. The new model accounts for expected credit losses, rather than incurred, with the aim of identifying losses in a much more timely manner.
This is a radical shift in approaching accounting and will significantly impact impairment calculations, and banks will need to implement substantial changes, in order to calculate and record the changes requested by IFRS 9. The new model will also see a significant realignment of hedge accounting, which will now run parallel with risk management activities, facilitating a better reflection of both activities in financial statements.
In order for financial institutions to be ready for this change a number of projects are underway to ensure a smooth transition from the current standards to IFRS 9. Organisations with an Accounting Period beginning 1st Jan 2018 onwards have recognised that they need a skeleton structure in place and our market interactions are already indicating a high demand for advice and guidance in this area.
If you are an IFRS 9 professional or have an interest in working with organisations managing this change contact us on firstname.lastname@example.org or 0121 643 2100. We are also keen to hear from organisations requiring resource in this area.