EFRAG Final Comment Letter in response to the IASB Request for Information on the Post-Implementation Review of IFRS 9 Financial Instruments - Impairment

​EFRAG has published its Final Comment Letter
(‘FCL’)
in response to the IASB's Request for Information as a part of the
Post-implementation Review (‘PIR’) of the impairment requirements in IFRS
9 Financial Instruments.

​In its FCL EFRAG considers that the impairment requirements in IFRS 9 generally work as intended and that the use of a forward-looking expected credit loss model results in more timely recognition of credit losses than applying IAS 39 Financial Instruments: Recognition and Measurement.

Nevertheless, EFRAG highlights some issues of application or diversity in practice with different levels of priority that should be further considered by the IASB in the context of this PIR :

  • Cash shortfalls used to measure expected credit losses - whether the expression "all cash shortfalls" used in Appendix A of IFRS 9 to define credit loss should be interpreted within the scope of concessions from the lender due to financial difficulties of the borrower.
  • Interaction between modification, impairment, and derecognition requirements in IFRS 9
  • More guidance in the form of illustrative examples and/or educational material would enhance the quality and comparability of credit risk disclosures.

In addition, EFRAG recommends the IASB to consider other issues with medium priority, such as intra-group loans and guarantees, collective assessment of significant increases in credit risk, loan commitments, financial guarantees and other credit enhancements and purchased or originated credit impaired assets requirements.

More details on EFRAG's recommendations can be found in EFRAG's Final Comment Letter here.

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