ITC 52 Request for Comment on IASB Request for Information on Post-implementation Review IFRS 9 Financial Instruments–Impairment

Tuesday, June 6, 2023

Your feedback is requested to inform the post-implementation review of IFRS 9 Financial Instruments–Impairment.

The post-implementation review of IFRS 9 is being conducted in three parts. The current review is the second part and covers the impairment requirements.

The ‘expected credit loss’ model in IFRS 9 replaced the previous ‘incurred credit loss’ model in IAS 39 Financial Instruments: Recognition and Measurement, which only allowed credit losses to be recognised when a loss event occurred. Under the incurred credit loss model, the effects of possible future credit loss events were not considered, even when they were expected.

ITC 52 is seeking feedback on whether the impairment requirements in IFRS 9 result in more timely recognition of credit losses compared to requirements in IAS 39 and if it addresses the complexity caused by having multiple impairment models for financial instruments.

The ITC also seeks feedback on whether there are any fatal flaws related to:

1. the general approach to recognising expected credit losses;
2. determining significant increases in credit risk;
3. measuring expected credit losses;
4. simplified approach for trade and lease receivables;
5. purchased or originated credit-impaired financial assets
6. applying expected credit losses with other requirements;
7. transition requirements; and
8. credit risk disclosures.

The AASB’s policy is to incorporate International Financial Reporting Standards (IFRS Standards) into Australian Accounting Standards applicable to for-profit and not-for-profit entities in the private sector or the public sector.  Accordingly, the AASB is inviting comments on any of the questions listed in the Questions for Respondents section of the IASB Request for Information.

Please submit your comments to the AASB by 18 August 2023, via the AASB website or email [email protected].