IASB publishes its review of classification and measurement requirements relating to financial instruments

The International Accounting Standards Board (IASB) has today published its project report and feedback statement concluding the Post-implementation Review (PIR) of the classification and measurement requirements in IFRS 9 Financial Instruments.

Feedback from stakeholders and research undertaken as part of the PIR show that the requirements set out in IFRS 9 are working as intended and provide useful information to the users of financial statements.

In response to feedback, the IASB has also identified areas for research and standard-setting to further enhance information provided to users of financial statements.

The IASB has initiated a standard-setting project focused on a company’s assessment of the contractual cash flow characteristics of financial assets with ESG-linked features and on electronic cash transfers as settlement of a financial asset or liability.

This will also include:

• clarification of the application of contractual cash flow characteristics assessments to contractually linked instruments; and
• improvements to disclosures of fair value changes relating to equity instruments a company has presented in other comprehensive income rather than in profit or loss (OCI presentation election).

An exposure draft setting out proposed amendments from this project will be published in Q1 of 2023.

A research project has also been added to the IASB’s work plan to explore whether it can clarify requirements for applying the effective interest method to financial instruments measured at amortised cost and requirements for modifications of financial instruments.

The PIR sought feedback from companies, investors, auditors, standard-setters, regulators and academics. The IASB received 95 comment letters and attended more than 40 meetings with stakeholders from around the world.

The IASB reviews major standards several years after their effective date, to learn whether the standard is working as intended.

Andreas Barckow, Chair of the IASB, said:

IFRS 9 was the cornerstone of the IASB’s response to the financial crisis. It is encouraging to see that the PIR of the classification and measurement requirements of IFRS 9 has concluded that the standard is working as intended. But feedback has also highlighted areas for further clarification. We now move onto reviewing the impairment requirements of IFRS 9 and look forward to engaging stakeholders in that work.

The IASB began the PIR of IFRS 9─Impairment in the second-half of 2022. A request for information is expected to be published in the first-half of 2023.

Access the Post-implementation Review of IFRS 9—Classification and Management Project Report and Feedback Statement.