What is the objective of IFRS9?
The objective of the International Financial Reporting Standard (IFRS9) is to establish principles for the financial reporting of financial assets and financial liabilities that will present relevant and useful information to users of financial statements for their assessment of the amounts, timing and uncertainty of an entity’s future cash flows.
What is new in IFRS9 compared to IAS39?
There are three (3) major areas:
i.Classification and measurement of financial assets and financial liabilities. Financial assets are classified on the basis of the business model within which they are held and their contractual cash flow characteristics. The fair value option for financial liabilities was changed to address own credit risk. A “fair value through other comprehensive income” measurement category for particular simple debt instruments.
ii.Impairment methodology. The changes relate to accounting for an entity’s expected credit losses on its financial assets and commitments to extend credit. Under IFRS9, it is no longer necessary for a credit event to have occurred before credit losses are recognized.
iii.Hedge accounting. The changes align hedge accounting more closely with risk management, establish principles and addressed some gaps in hedge accounting that existed in IAS39.
How do we implement IFRS9?
J.Samuel Richards(® & Associates can help your entity on its IFRS9 project in East Africa.
For more detailed information and inquiries
Albert Richards Otete
Financial Services Partner
+256 772 703444