IASB publishes final version of IFRS 9

The International Accounting Standards Board (IASB) has published the final version of IFRS 9 ‘Financial Instruments’ bringing together the classification and measurement, impairment and hedge accounting phases of the IASB’s project to replace IAS 39 ‘Financial Instruments: Recognition and Measurement’. The Standard supersedes all previous versions of IFRS 9 and is effective for periods beginning on or after 1 January 2018 with early application permitted.

IFRS 9 introduces a logical approach for the classification of financial assets, which is driven by cash flow characteristics and the business model in which an asset is held.  This single, principle-based approach replaces existing rule-based requirements that are generally considered to be overly complex and difficult to apply.  The new model also results in a single impairment model being applied to all financial instruments, thereby removing a source of complexity associated with previous accounting requirements.

The IASB has introduced a new, expected-loss impairment model that will require more timely recognition of expected credit losses. Specifically, the new Standard requires entities to account for expected credit losses from when financial instruments are first recognised and to recognise full lifetime expected losses on a timely basis.

IFRS 9 introduces a substantially-reformed model for hedge accounting, with enhanced disclosures about risk management activity.  The new model represents a significant overhaul of hedge accounting that aligns the accounting treatment with risk management activities, enabling entities to better reflect these activities in their financial statements.

IFRS 9 also removes the volatility in profit or loss that was caused by changes in the credit risk of liabilities elected to be measured at fair value.  This change in accounting means that gains caused by the deterioration of an entity’s own credit risk on such liabilities are no longer recognised in profit or loss.

IAESB proposes framework to enhance clarity of standards

The International Accounting Education Standards Board (IAESB) has proposed a revised Framework for International Education Standards. The Framework is targeted primarily to IFAC member bodies that have direct or indirect responsibility for the learning and development of their members and students. The proposed Framework consists of four parts:

• Part One identifies the purpose and scope of the Framework;
• Part Two explains the educational concepts of professional competence, learning outcomes, general education, initial professional development, continuing professional development, and assessment and measurement used in the process of determining the effectiveness of learning and development, which will be used by the IAESB when developing the IESs;
• Part Three describes the nature of the IESs and related IAESB publications; and
• Part Four outlines IFAC member body obligations relating to the IESs.

As part of its initiative to improve the clarity of its standards, the IAESB is redrafting all eight of its IESs in accordance with its new drafting conventions. The IAESB invites all stakeholders to comment on its proposals by October 27, 2014.

IPSASB Publishes Exposure Draft ‘Improvements to IPSASs 2014’

The International Public Sector Accounting Standards Board (IPSASB) has published Exposure Draft (ED 55) Improvements to IPSASs 2014, which proposes changes based on amendments from the International Accounting Standards Board’s annual improvements and minor scope amendments projects. ED 55 proposes improvements to four standards (IPSAS 1, IPSAS 17, IPSAS 28, and IPSAS 31).  The deadline for comment is September 30, 2014

IFRS Foundation publishes update on leases project

The IFRS Foundation staff has published a document setting out the key tentative decisions reached on the leases project during the first half of 2014. The IASB-Financial Accounting Standards Board (FASB) joint project would result in a replacement of IAS 17 Leases. The Exposure Draft ED/2013/6 Leases was published on 16 May 2013. It is expected that the new leases standard will be issued in 2015.