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
Featured Experts
Masha Muzyka
CECL, IFRS 9, and IFRS 17 expert; credit risk and insurance risk specialist; strategic planning and credit analytics solutions consultant
Metin Epözdemir
Metin Epözdemir helps European and African banks with design and implementation of credit risk, stress testing, capital management, and credit loss accounting solutions.
Dieter Van der Stock
IFRS subject matter expert; LDTI subject matter expert; accounting authority; risk management specialist
Previous Article
IAIS Adjusts Work Program to Address Impact of COVID-19 on InsurersRelated Articles
EBA Updates Filing Rules for Supervisory Reporting
The European Banking Authority (EBA) published version 5.1 of the filing rules for supervisory reporting.
ECB Amends Guideline on Procedures for Collection of AnaCredit Data
The European Central Bank (ECB) Guideline 2021/1829 on the procedures for the collection of granular credit and credit risk data has been published in the Official Journal of European Union.
ECB Amends Guideline on Procedures for Collection of AnaCredit Data
The European Central Bank (ECB) Guideline 2021/1829 on the procedures for the collection of granular credit and credit risk data has been published in the Official Journal of European Union.
EBA Publishes Standards on Disclosure of Investment Policy Under IFR
The European Banking Authority (EBA) published the final draft regulatory technical standards on disclosure of investment policy by investment firms, under the Investment Firms Regulation (IFR).
APRA Finalizes Guidance for New Prudential Standard on Remuneration
The Australian Prudential Regulation Authority (APRA) published the prudential practice guide CPG 511 to assist banks, insurers, and superannuation licensees in meeting requirements of CPS 511, the new prudential standard on remuneration.
OCC Updated LIBOR Self-Assessment Tool for Banks
The Office of the Comptroller of the Currency (OCC) published a bulletin that provides an updated self-assessment tool for banks to evaluate their preparedness for cessation of the London Interbank Offered Rate (LIBOR).
TCFD Updates Guidance for Financial Disclosures on Climate Risk
The Financial Stability Board (FSB) published a report that examines the progress made toward disclosures aligned with recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).
BCBS Report Examines Progress on Adoption of Basel III Framework
The Basel Committee on Banking Supervision (BCBS) published the progress report on adoption of the Basel III regulatory framework in member jurisdictions.
ACPR Implements Updates Related to DPM Version 3.1
The French Prudential Supervisory Authority (ACPR) has implemented, in its information system, updates linked to the Data Point Model (DPM) version 3.1.
EBA Note Examines Transition Risks of Benchmark Rates
The European Banking Authority (EBA) published a thematic note that aims to identify and raise awareness of the transition risks of benchmark rates, as the London Interbank Offered Rate (LIBOR) and the Euro Overnight Index Average (EONIA) are close to being phased out.
