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03 January 2017

IASB: IFRS 9 and IFRS 15—one year to go

IASB is ready to assist to companies applying IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers for the first time. The final countdown has started to the effective date of IFRS 9 and IFRS 15.

IFRS 9 changes

In summary, IFRS 9 will replace IAS 39 Financial Instruments and bring together the following aspects of accounting for financial instruments:

  • classification and measurement;
  • impairment; and
  • hedge accounting.

IFRS 9 is relevant to many different companies but will have the greatest effect on financial institutions.

In practice, the most significant change will be in the way financial institutions account for loan losses. IFRS 9 replaces the incurred loan loss model of IAS 39 with an expected loan loss model. The new model is likely to result in greater loan loss provisions by financial institutions and will provide investors with useful information on changes in credit risk exposure.


IFRS 15 changes

IFRS 15 will replace IAS 18 Revenue and IAS 11 Construction Contracts. It will establish a comprehensive framework for determining when to recognise revenue and how much revenue to recognise. It is expected to increase comparability among companies across sectors and markets.

IFRS 15 will affect almost all companies because it covers revenue from all contracts with customers, except for revenue from leases, financial instruments and insurance contracts.


Heads up for investors

Investors should find useful information in the notes to companies’ financial statements about the expected impact of a new Standard even before companies apply that Standard (this is a requirement in IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors). For IFRS 9 this might include information about how loan loss provisions are likely to change, and for IFRS 15 it might include information about the likely effects on the amount or timing of revenue recognition.

Full press release

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