The IASB published a document on 27 March responding to questions regarding the application of IFRS 9 Financial Instruments during this period of enhanced economic uncertainty arising from the covid-19 pandemic.
The document is prepared for educational purposes, highlighting requirements within the Standard that are relevant for companies considering how the pandemic affects their accounting for expected credit losses (ECL). It does not change, remove nor add to, the requirements in IFRS 9 Financial Instruments. It is intended to support the consistent and robust application of IFRS 9.
The document acknowledges that estimating ECL on financial instruments is challenging in the current circumstances and highlights the importance of companies using all reasonable and supportable information available—historic, current and forward-looking to the extent possible—when determining whether lifetime losses should be recognised on loans and in measuring ECL.
The document reinforces that IFRS 9 does not provide bright lines nor a mechanistic approach in accounting for ECLs. Accordingly, companies may need to adjust their approaches to forecasting and determining when lifetime losses should be recognised to reflect the current environment.
The IASB published also Friday afternoon 27 March a message on the coronavirus and the Foundation’s work announcing that the time line for IFRS 17 and IBOR phase 2 will be kept being both time-sensitive projects; the publication of narrow-scope amendments will be postponed to May; and the IASB Board will discuss further specific messages during its April meeting. The IASB also published education materials to support the consistent and robust application of IFRS 9 during the current uncertain period.