IASB’s IFRS 9

On July 24, 2014, the International Accounting Standards Board (IASB) issued its own standard for accounting for credit losses, IFRS 9 Financial Instruments. Under this model, financial institutions must account for expected credit losses when they are first recognized, as well as recognize expected losses over the life of the loan.

 

IASB's IFRS 9

 

IFRS 9 Financial Instruments descends directly from the IASB’s exposure draft, which outlays the three-bucket expected credit loss model. These three “buckets” represent the different stages which reflect the general pattern of the deterioration of a financial instrument that ultimately defaults. The differences in accounting for each stage relate to the recognition of expected credit losses and, for financial assets, the calculation and presentation of interest revenue.

This differs from the Current Expected Credit Loss (CECL) model proposed by the Financial Accounting Standards Board (FASB) in that lifetime expected losses are segmented by the prevalence of objective evidence of impairment in IFRS 9, whereas the CECL model makes no distinction.


Related Asset - Blog
IASB delivers expected credit loss model

Excerpt Pulled From Blog:

"Despite much deliberation and an initial desire to converge ideologies, the International Accounting Standards Board (IASB) and its American counterpart, the Financial Accounting Standards Board (FASB) were unable to draft uniform revisions to the current incurred loss model for the ALLL."

Read More: http://www.alll.com/resource-center/iasb-delivers-expected-credit-loss-model/


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