IFRS 9: An estimable challenge

Under International Accounting Standard 39 (IAS 39), losses on financial assets subject to impairment are not recognised until there is evidence that they have become impaired. International Financial Reporting Standard 9 (IFRS 9) represents a radical departure from this philosophy, forcing banks to make greater and earlier provisions against losses. Under IFRS 9, banks will have to immediately set aside 12-month expected credit losses from the time any unimpaired asset is originated or purchased.

This panel will discuss:

• A brief introduction to IFRS 9
• How does the three-stage impairment process work?
• How should banks come up with estimates of expected credit losses?
• What methods for estimating credit losses will regulators expect?
• How should models for estimating credit losses be constructed and calibrated?
• What are the technological challenges the industry will face?
• What is involved in effectively aggregating the data banks will need?
• How does IFRS 9 change the role of the risk function in relation to finance and accounting?
• What changes will be needed when it comes to governance and audit?
• What are the longer-term implications of IFRS 9?
• Could the Financial Accounting Standards Board (FASB) adopt a similar approach to IFRS 9 in the US?

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