 Prudential Application of IFRS 9: (Un)Fair Reporting in COVID‐19 Crisis for Banks Worldwide?!Aziz el Barnoussi, Bryan Howieson and Ferdy van Beest Australian Accounting Review, 2020, vol. 30, issue 3, 178-192 Abstract: IFRS 9 and ASC 326 were developed after the 2008–2009 financial crisis, and both accounting standards include an expected loss model as a means of providing for credit losses. As a result of the COVID‐19 worldwide pandemic, however, banks face considerable uncertainty about the potential scale of the bad debts for which they will need to provide. Banks need to reassess their loan assets, by updating their risk models with expectations about potential default rates and future macro‐economic and financial developments. However, we see several interventions worldwide. The European Securities and Markets Authority addresses a position paper on the prudential application of IFRS 9. The Coronavirus Aid, Relief, and Economic Security Act in the US has given banks an optional deferral of implementation of the CECL model until 31 December 2020. This paper addresses the challenges banks face when applying the expected losses model during the current crisis. More importantly, it discusses the impact of supervisor and regulators’ intervention on future financial reporting comparability, transparency and whether there is a level playing field. Date: 2020 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bla:ausact:v:30:y:2020:i:3:p:178-192 Ordering information: This journal article can be ordered from Access Statistics for this article Australian Accounting Review is currently edited by Linda M. English More articles in Australian Accounting Review from CPA Australia |
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