IIF responds to the IASB PIR on IFRS 9 Financial Instruments Impairment

On September 27, the IIF submitted industry perspectives in response to the International Accounting Standards Board (IASB) Request for Information on the Post-Implementation Review of IFRS 9 Financial Instruments Impairment. The IIF appreciates the objective of the IASB to introduce a forward-looking expected credit loss (ECL) model that aims to provide useful information on changes in credit risk and resulting economic losses and address certain limitations and complexities in comparison to the impairment requirements under IAS 39 Financial Instruments: Recognition and Measurement. Overall, we believe that the impairment requirements in IFRS 9 are working well and achieve the objectives associated with moving to a forward-looking ECL model. We believe that principles-based requirements remain fundamental, providing financial institutions with the flexibility to produce results that are aligned with internal credit risk management practices, responsive to a changing macroeconomic environment and appropriately capture differences between portfolios which can vary significantly by entity and geography. While we do not note any fundamental concerns with the general approach, we have identified opportunities for greater flexibility in the application of the requirements which would result in better alignment of the financial results with internal credit risk management practices, without sacrificing the usefulness of the information and while still achieving the objectives of the standard.