How the pandemic affects IFRS 9 reporting

As a result of the coronavirus pandemic, companies reporting under IFRS may need to adjust their approaches to forecasting and determining when lifetime losses should be recognised in the current environment, according to a document published Friday by the International Accounting Standards Board.

IFRS 9 and COVID-19” was published to respond to questions regarding the application of IFRS 9, Financial Instruments, during the economic uncertainty arising from the pandemic.

The document highlights requirements within IFRS 9 that are relevant for companies as they consider how the pandemic affects their accounting for credit losses. The document does not change the requirements of IFRS 9 but is intended to support the consistent and robust application of IFRS 9.

IFRS 9 was developed to provide more forward-looking information about loan losses and to give investors timely information about changes in credit risk.

Estimating expected credit losses on financial instruments is challenging as a result of the pandemic. The document urges companies to use all reasonable and supportable information available when determining whether lifetime losses should be recognised on loans and in measuring expected credit losses. To the extent possible, historic, current, and forward-looking information should be used, according to the document.

For more news and reporting on the coronavirus and how management accountants can handle challenges related to the outbreak, visit FM’s coronavirus resources page.

Ken Tysiac ( is FM magazine’s editorial director.