Effective from 1 January 2018, IFRS 9 Financial Instruments is one of the most complex and revolutionary standards even for non-financial institutions.
The standard IAS 39 no longer applies and the financial statements for the year ended 31 December 2018 need to be prepared under IFRS 9.
The most significant change relates to the provisioning method under the Expected Credit Losses model (ECL). The standard requires banks and other companies to recognize ECL and to update the amount of ECL recognised at each reporting date to reflect changes in the credit risk of financial assets based on the general and simplified approach.
Both approaches are forward-looking and eliminate the threshold for the recognition of ECL, so that it is no longer necessary for a “trigger event” to have occurred before credit losses are reported.
Whether its during an audit or we are engaged to prepare financial statements under IFRS on behalf of our clients, we assist entities in the implementation IFRS 9 standard addressing classification, measurement and impairment.
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