Exposure Draft: Amendments to the Classification and Measurement of Financial Instruments

As part of a series of webinars on proposed changes to IFRSs with particular impact on financial services industry entities, we would like to take the opportunity to provide an overview of this recent exposure draft “Amendments to the Classification and Measurement of Financial Instruments: Proposed Amendments to IFRS 9 and IFRS 7” issued by the International Accounting Standards Board (“IASB”).

Why does the IASB propose these amendments?

The IASB carried out a post-implementation review of the classification and measurement requirements in IFRS 9 Financial Instruments and related requirements in IFRS 7 Financial Instruments: Disclosures.

After analysing the responses from this review, the IASB concluded that the standards are performing as intended and financial statement users can get useful information from the disclosures provided by an entity. However, the IASB also identified some specific areas in the standards for further enhancement or clarification to improve the understandability.

What are the proposed changes?

Based on the feedback from the review, respondents raised concerns about the potential consequences when applying IFRS 9 to the settlement of a financial asset or a financial liability via electronic cash transfers. To address these concerns, the IASB proposes to introduce new requirements with respect to derecognition of financial liabilities settled through electronic transfers.

Also, in response to concerns about application of IFRS 9 classification model to financial assets with ESG linked features and avoid any potential diversity in practice, the IASB proposes to clarify the general principles for establishing if cash flows are solely payments of principal and interest on the principal amount outstanding and the more detailed guidance regarding financial assets with non-recourse features and investments in contractually linked instruments.

What can you expect from this webinar?

In this webinar, Mateusz Lasik, partner in National Technical and the China IFRS Centre of Excellence, together with Gigi Lam (Director, National Technical and the China IFRS Centre of Excellence) and Sizwe Ngwenya (Associate director, Complex Accounting, FSI), will give a detailed explanation and views on the potential practical issues of the proposed amendments with a focus on application to the FSI industry.

Contacts:

Mateusz Lasik