If you are a banker, a key decision maker in the financial sector or involved in financial reporting, you must be aware that in July 2014 the International Accounting Standards Board (IASB) issued the final version of IFRS 9 Financial Instruments, which replaces International Accounting Standard 39 (IAS 39). This new standard has an effective date of 1st January 2018, with an early adoption permitted.
IFRS 9 gathers in one single standard the different stages of IAS 39 standard replacement project. It defines the new rules for financial instruments classification and measurement, the impairment of financial assets credit risk and hedge accounting, excluding macro-hedging transactions. Its implementation is not limited to an accounting project. The project has impacts on the organisation, on the Risks and Finance functions, on the production of accounting, regulatory and prudential reporting, on all business sectors and activities.
Implementation of IFRS 9’s forward-looking requirements are challenging and involve a high degree of judgement. Reported credit losses are expected to increase and become more volatile under the new expected credit loss model. How financial assets are classified becomes more judgemental and may affect how capital resources and requirements are calculated. Adopting the new rules require a lot of time, effort and money.
The effects of IFRS 9 require close examination not only on financial statements but also capital adequacy, IT systems, people, taxes, processes and product design among others. The 7th Annual Annual Risk Management Forum titled ‘RISK ZONE 2017’ which will happen on 14th & 15th September 2017 in Vienna provides a great opportunity for Financial Industry Professionals to understand the latest Regulatory Changes that are taking place within the global financial landscape.