Unraveling IFRS 9 and IPSAS 41: The Intricacies and Prospects of the Expected Credit Loss Impairment Model

Thursday, October 5th, 2023

Since the implementation of the IFRS 9 Financial Instrument on January 1, 2018, a new era of financial accounting has emerged, transforming how organizations recognize expected credit losses. This forward-looking provisioning model aimed to provide a more accurate assessment of credit risk and timely recognition of potential losses. However, challenges persist as many entities worldwide have yet to fully implement IFRS 9’s requirements or establish robust Expected Credit Loss (ECL) models. Furthermore, the unpredictable nature of the COVID-19 pandemic has raised concerns about the predictability of existing ECL models.

To address these issues, the International Accounting Standards Board (IASB) is conducting a post-implementation review (PIR) of the expected credit loss (ECL) requirements in IFRS 9. The review encompasses critical areas such as the recognition of ECL, determining significant increases in credit risk, measurement of ECL, and disclosures, with the aim of enhancing the effectiveness and relevance of the model.

In parallel, the accounting landscape is undergoing a significant change with the introduction of IPSAS 41, effective from January 1, 2023, replacing parts of IPSAS 29. IPSAS 41 introduces a revolutionary single forward-looking model that eliminates the threshold for impairment recognition. Under this new model, entities are required to recognize expected credit losses continuously, utilizing a dual measurement approach of either 12-month or lifetime expected credit losses. This forward-looking approach enhances the quality of information available to stakeholders, aiding better decision-making.

For those seeking a comprehensive understanding of these changes, a one-day workshop dedicated to navigating the challenges and opportunities presented by the IFRS 9 and IPSAS 41 impairment models is being offered. This hands-on session provides participants with a clear roadmap for implementing the ECL model and highlights the synergies between regulatory and IFRS 9 impairment requirements. Expert instructors will guide attendees through real-life examples and group case studies, addressing critical issues such as ECL models, back-testing challenges, and best practices, all within the context of the ongoing COVID-19 pandemic.

Read More: https://prfree.org/@shasat/unraveling-ifrs-9-and-ipsas-41-the-intricacies-and-prospects-of-the-expected-credit-loss-impairment-model-qk5qmm3jwafu