PiR of IFRS 9: Board clarifies scope of next phase

Keywords: Mazars, Thailand, IFRS, Post-implementation Review, IFRS 9, IASB

28 October 2021

Readers will remember that the Board decided that the PiR would initially focus solely on the Classification and Measurement section of the standard. As regards the Impairment section of the standard, the Board felt that the pandemic and the accompanying economic challenges constituted a good test of IFRS 9 and that it would be better to wait until lessons could be learned from this before starting the PiR for this section.

At the Board meeting, the IASB staff presented the feedback from the outreach activities that were carried out to identify the topics that should be addressed in the next phase of the Classification and Measurement PiR.

The Board has decided to focus on the following topics:

• the business model assessment for financial assets; more specifically:
  • the use of judgement in this assessment; and
  • the reclassification of financial assets following a change in business model;
• the contractual cash flow characteristics assessment (SPPI test) for financial assets; more specifically:
  • applying the assessment in the light of market developments (including new product features such as financial assets with sustainability-linked features ); and
  • the IFRS 9 requirements for investments in contractually linked instruments;
• the option for equity instruments to present fair value changes in other comprehensive income; more specifically:
  • how widely the presentation option is used and the types of instruments for which it is used;
  • the effect of the option on entities’ investment decisions and on the usefulness of information to users of financial statements;
• the presentation in other comprehensive income of changes in fair value resulting from changes in own credit risk for financial liabilities designated at fair value through profit or loss;
• the accounting treatment of modifications to contractual cash flows; more specifically:
  • the differences in the IFRS 9 drafting between the requirements for modifications for financial assets and financial liabilities; and
  • the analysis used to determine when a modification should result in derecognition of the instrument;
• the transition to IFRS 9; more specifically:
  • the effects of the transition reliefs provided; and
  • the balance found between reducing costs for preparers of financial statements and providing useful information to users of financial statements.

The next step will be for the Board to approve the publication of a Request for Information on the above topics, to be prepared by the staff. It is expected to be published around the end of September.