IASB and regulators highlight IFRS 9 ECL requirements in coronavirus pandemic

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EY Global IFRS

1 Apr 2020 PDF

On 27 March, the IASB published a document supporting the consistent application of IFRS 9 to the measurement of ECLs during the coronavirus pandemic.

The IASB’s document, Accounting for expected credit losses applying IFRS 9 Financial Instruments in the light of current uncertainty resulting from the Covid-19 pandemic, highlights the relevant requirements in the standard and is broadly consistent with the guidance given by a number of regulators, which the IASB encourages preparers to consider.

It emphasises that IFRS 9 should not be applied mechanically and that prior assumptions may no longer hold true in the current environment. Relief measures, such as payment holidays, will not automatically lead to loans being measured on the basis of lifetime losses and considerable judgement will be needed to measure ECLs at this time.