IFRS Publishes Statement on Its Work During the COVID-19 Crisis
IFRS, in its statement, emphasized that it shares global concerns about the impact of COVID–19 and is supporting its stakeholders by reconsidering timelines of its meetings and publications, providing information on the application of IFRS 9 on financial instruments, and offering calendar updates on ongoing activities. IFRS published a document responding to questions about the application of IFRS 9 during the enhanced economic uncertainty arising from the COVID-19 pandemic. The document acknowledges that estimating expected credit losses on financial instruments is challenging in the current circumstances and highlights the importance of companies using all available reasonable and supportable information—historic, current, and forward-looking to the extent possible—when determining whether lifetime losses should be recognized on loans and in measuring expected credit losses. IASB will also postpone to May 2020 the publication of several narrow-scope amendments to IFRS standards originally planned for March and April 2020.
The document regarding application of IFRS 9 is prepared for educational purposes, highlighting requirements within the standard that are relevant for companies considering how the pandemic affects their accounting for expected credit loss. This material is intended to support the consistent and robust application of IFRS 9. The document reinforces that IFRS 9 does not provide bright lines nor a mechanistic approach in accounting for expected credit loss. Accordingly, companies may need to adjust their approaches to forecasting and determining when lifetime losses should be recognized to reflect the current environment. The IFRS Foundation and IASB continue to work in close cooperation with regulators and others regarding the application of IFRS 9 and the document encourages companies to consider guidance provided by prudential and securities regulators.
Furthermore, despite the challenges arising from the COVID-19 pandemic, IASB and its technical staff continue to advance time-sensitive projects, such as the projects on interbank offered rate (IBOR) reform and amendments to IFRS 17 Insurance Contracts, in accordance with the original project plans. Recognizing the importance of giving the stakeholders enough time to respond effectively to its work, the Board will discuss specific measures during its April meeting.
Keywords: International, Banking, Insurance, Securities, IFRS 9, COVID-19, Financial Instruments, Expected Credit Loss, IBOR Reform, IFRS 17, Insurance Contracts, IASB, IFRS
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