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.”
Improvements to cashflow statements are being targeted in a consultation launched by the Financial Reporting Council (FRC)
Dr Richard Willis provides a several thousand-year history lesson of the profession, from origin to modern-day
The Financial Reporting Council has issued guidance regarding the annual reporting of 1,200 large and smaller listed companies. The letter highlighted the key issues and improvements that can be made in the 2016 reporting season
Long-serving PwC director Fiona Westwood has moved to Smith & Williamson and stepped up to partner