Unravelling IFRS 9 and IPSAS 41: The Intricacies and Prospects of the Expected Credit Loss Impairment Model
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.
During this workshop, participants will have the opportunity to delve into key aspects of the expected credit loss impairment model, including understanding the transition from the incurred loss model to the expected credit loss model under IFRS 9 and IPSAS 41 and the implications of this transition. They will also explore the scope and objective of the expected credit loss impairment model, discussing the latest challenges and modifications required in the ECL model, particularly in response to the COVID-19 pandemic.
Additionally, participants will examine proposed models for measuring expected credit losses, including the three-bucket model and credit-adjusted effective interest rate. They will gain insights into the application of the ECL model to specific financial instruments such as loan commitments and financial guarantee contracts and explore the intricacies of implementation challenges associated with the ECL model, including the issue of pro-cyclicality and building buffer.
This workshop also addresses the alignment of the expected credit loss impairment model with Basel III/IV requirements and sheds light on the disclosure requirements under the ECL model and the challenges ahead. Participants will have the opportunity to develop an implementation roadmap and plan for the transition to the ECL model while comparing it with the proposed impairment model by the FASB (CECL approach). Furthermore, they will identify emerging issues and challenges related to the ECL model, ensuring a comprehensive grasp of this vital financial accounting change.
By attending this one-day workshop, participants will not only gain a comprehensive understanding of the expected credit loss impairment model and its implementation under IFRS 9 and IPSAS 41 but also have the opportunity to participate in group exercises and case studies to reinforce their learning. Additionally, they will be able to seek clarification during the Q&A sessions to address any doubts or concerns they may have.
Here is the schedule of upcoming programs by Shasat. However, we recommend you continue to visit Shasat's website for the most up-to-date program schedules.
IFRS 9 and IPSAS 41 Impairment Workshop | GID 23002 | Zurich: November 4, 2023
IFRS 9 and IPSAS 41 Impairment Workshop | GID 23003 | Dubai: November 15, 2023
IFRS 9 and IPSAS 41 Impairment Workshop | GID 23004 | Singapore: October 17, 2023
IFRS 9 and IPSAS 41 Impairment Workshop | GID 23007 | Cape Town: October 10, 2023
IFRS 9 and IPSAS 41 Impairment Workshop | GID 23012 | Sydney: November 23, 2023
IFRS 9 and IPSAS 41 Impairment Workshop | GID 23013 | Miami: December 16, 2023
IFRS 9 and IPSAS 41 Impairment Workshop | GID 23000 | Online | Available on request
For more details and to enrol in IFRS 9 and IPSAS 41 Impairment Workshop, please visit:
The IFRS 9 Financial Instrument became effective from 1 January 2018 which bring together a new framework concerning the classification and
