Amendments to IFRS 9 – Contractual cash flow characteristics of financial assets

This page will provide updates on the UKEB project to respond to IASB’s project on Amendments to IFRS 9 – Contractual cash flow characteristics of financial instruments.

Timeline 

In May 2022 the IASB decided to start a standard setting project to clarify particular aspects of the IFRS 9 requirements for assessing a financial asset’s contractual cash flow characteristics (i.e., the ‘solely payments of principal and interest’ or SPPI requirements).

The IASB’s decision was taken in response to feedback received on the Request for Information Post-implementation Review of IFRS 9 - Classification and Measurement. The IASB plans to publish an exposure draft in early 2023. The UKEB plans to create a Project Implementation Plan and commence outreach aligned to the IASB timeline.  In the meantime, the UKEB continues to monitor IASB and industry discussions on this topic.

Background 

IFRS 9 Financial Instruments sets out the requirements on how an entity classifies and measures financial assets, financial liabilities and some contracts to buy or sell non-financial items. The standard was effective for annual periods commencing on or after 1 January 2018. Insurers may defer the effective date until 1 January 2023, if certain conditions are met.

Under its due process the IASB is required to conduct a post-implementation review of all new IFRS standards and major amendments. The principal purpose of the post-implementation review is to assess whether the standard or amendment is meeting its objectives. 

The IASB divided its overall post-implementation review of IFRS 9 into three phases:

  1. Classification and Measurement - The IASB published its Request for Information Post-implementation Review of IFRS 9 - Classification and Measurement in September 2021.
  2. Impairment - The IASB plans to publish a request for information on its Post-implementation review of the IFRS 9 impairment requirements during H1 2023.
  3. Hedge Accounting - A post-implementation review addressing IFRS 9 Hedge Accounting is expected at a future date.

The IASB post-implementation review of IFRS 9 also considers the related disclosure requirements in IFRS 7 Financial Instruments: Disclosures, in each phase of the project.

UKEB’s Planned Outreach

The UKEB project outreach will include discussions with stakeholders and public consultation on a draft UKEB comment letter to the IASB’s Request for Information.

We would like to hear the perspectives of UK stakeholders from a variety of backgrounds, including users, preparers, academics, auditors and regulators.

More detailed information on outreach activities will be published in due course. If you have been following the IASB discussions on the potential amendments to IFRS 9 and want to share your views before an exposure draft is published, you can contact us at any time using the details at the end of this page.

For further updates on UKEB projects you can subscribe to our newsletters and alerts by emailing contact@endorsement-board.uk and putting SUBSCRIBE in the Subject.