RegulationAccounting StandardsBanks favour IFRS 9

Banks favour IFRS 9

Banks welcome impairment accounting proposals in global standard IFRS 9, saying it is better than the old IAS 39

IMPAIRMENT ACCOUNTING standard IFRS 9 is favoured by the majority of banks, which believe it is an improvement on the old UK standard IAS 39.

By the end of this year more than half will have begun implementation of the yet-to-be-finalised standard, and a survey by Deloitte shows this figure will rise to almost 90% by 2012.

The standard focuses on loan losses and when they are accounted for. During the financial crisis, the incurred loss model was found wanting and stakeholders called for a move to an expected loss model, in the hope that this would provide forewarning and prevent a similar disaster unfolding in future.

Global standard setters the IASB and US peers the FASB are jointly working on the project, which will form part of IFRS 9 Financial Instruments when completed.

IFRS 9 global leader at Deloitte, Mark Rhys, called impairment accounting “the single most significant area of change affecting the financial statements of major banking groups in the foreseeable future”.

However, banks have some reservations about the standard; more than half fear it will lessen comparability between institutions, and around 26% said it would reduce the usefulness of financial statements.

Rhys said banks believe regulators will benefit most from the extra detail provided, concluding: “It was also found that it may be difficult for those without technical accounting backgrounds to understand how the changes affect loan loss accounting and, consequently, loan pricing.”

Related Articles

IASB overhauls insurance accounting with issuance of IFRS 17

Accounting Standards IASB overhauls insurance accounting with issuance of IFRS 17

7m Alia Shoaib, Reporter
Sports Direct implements FRC corrections in annual reporting

Accounting Standards Sports Direct implements FRC corrections in annual reporting

1y Stephanie Wix, Writer
Former CFO joins IASB board

Accounting Standards Former CFO joins IASB board

1y Stephanie Wix, Writer
Cashflow statement improvements targeted by watchdog

Accounting Standards Cashflow statement improvements targeted by watchdog

1y Stephanie Wix, Writer
FRC expects Brexit narrative within annual reports

Accounting Standards FRC expects Brexit narrative within annual reports

1y Stephanie Wix, Writer
FRC consults on approach to updating FRS 102 for changes in IFRS

Accounting Standards FRC consults on approach to updating FRS 102 for changes in IFRS

1y Richard Crump, Writer
MEP calls for IASB pay cuts

Accounting Standards MEP calls for IASB pay cuts

1y Richard Crump, Writer
IASB issues amendments to insurance contracts standard

Accounting Standards IASB issues amendments to insurance contracts standard

1y Richard Crump, Writer