The International Financial Reporting Standards are a set of accounting standards and practices that unites the world. It allows cross-border businesses to thrive and global corporations to conduct large-scale transactions seamlessly. Established by the International Accounting Standards Board (IASB), the IFRS offers a transparent and consistent system of rules and regulations that transcend administrative differences and global business communities. With it, companies can operate with ease anywhere in the world. IFRS ensures that all financial statements across the world are written according to their four main principles: clarity, reliability, relevance and comparability.

 Today, over 110 countries have adopted the IFRS regime. India is slowly coming on board as well. However, the IFRS guidelines are not set in stone. The board is constantly evolving and modifying existing regulations to simplify and optimise the process. One of the revised standards is the IFRS 9. It was created to replace the earlier IAS 39 standard. This change enables more clarity and reduced ambiguity. If you are new to the IFRS format, here below is an IFRS 9 summary and what this alteration entails. 

A Quick Look At The Former IAS 39 Standard

According to the IFRS board regulations, the IAS 39 served certain functions, such as: 

  • Acknowledge and evaluate financial liabilities and assets 
  • For contracts that buy or sell non-financial components 
  • Disapprove specific financial instruments 

While the intentions were good, the IAS 39 was considered one of the toughest standards to understand by many accountants. There were also complaints of inconsistencies. To lower the level of difficulty and complexity, the IASB revised the existing criteria in a new package, in the form of the IFRS 9. It is now easier to understand and far less complicated than the previous rules.

Read – Read in detail about the IFRS Course

A Guide To The IFRS 9 Summary

When the global economic crisis hit in 2008, it left the financial world reeling for years to come. The IFRS 9 was introduced in 2018 as a response to the recession. The idea was to improve the quality of accounting of financial assets and liabilities to avoid issues that could arise during another disaster. 

The IFRS 9 is similar to the previous IAS 39 standards. It carries out equal functions and operations. Here are some of the changes and dissimilarities:

  1. Elimination of impairment assessments 

The IFRS 9 has done away with assessment requirements for investments in equity instruments. Now, all impairment assessments will be measured at fair value through profit or loss (FVTPL) or fair value through other comprehensive income (FVOCI) instead of fair value and fair value changes to profit and loss.

  1. Categorisation and measurement 

When the IAS 39 was active, assets were measured according to their features and intentions to retain the investments by the owner. That has now changed. The new IFRS 9 format classifies financial assets according to the cash flow properties and the business model in connection to the assets. Here are a few more changes: 

Under IAS 39, the classification for measurement was base on maturity, loans and receivables, FVTPL and available-for-sale. With IFRS 9, the categories are amortized cost, FVOCI and FVTPL.
IAS 39 bases the classification on specific definitions for each category.  In IFRS 9, the financial assets are categorized according to the contractual cash flow features and business model
IAS 39 contains a specific separate assessment for financial asset host contracts. IFRS 9 standards ensure that the entire hybrid contract is assessed for classification and measurement. 
  1. Quicker recognition of impairment

Earlier, when loans defaulted, the IAS 39 model registered a delayed reporting of credit losses. The IFRS 9 is an updated version that fixes this issue. The IASB board created an ‘expected loss’ model that recognises the losses in a timely manner. It requires candidates to provide for future possible credit losses during the first reporting period, even if the possibility of repayment is very high.

  1. New disclosure requirements

The IFRS 9 has specific systems in order to ensure all relevant data is collected. These updated processes ensure all necessary information is registered. 

  1. More income statement volatility

The IFRS 9 will determine that all assets will have to be measured at fair value. All changes in fair value will be noted in profit and loss when they happen. This will increase the volatility of profit and loss.

  1. Elimination of impairment assessments 

The IFRS 9 has done away with assessment requirements for investments in equity instruments. Now, all impairment assessments will be measured at fair value through profit or loss (FVTPL) or fair value through other comprehensive income (FVOCI) instead of fair value and fair value changes to profit and loss.

Benefits Of Being An IFRS Professional

  • The opportunities are huge, as you can work in over 110 countries including India
  • The IFRS standards are used by various industries such as IT, banking, auditing firms and many others
  • The demand for IFRS-certified accountants is rising every day
  • The salary packages start at Rs 6 lakhs per annum. With experience, an IFRS professional expert is Rs 9 lakhs per annum. 
  • You can work for a number of companies in India that use IFRS, such as Wipro, Mahindra, Tata Motors, ICICI and Infosys

Eligibility criteria for IFRS qualification 

  • Graduates/postgraduates with a commerce degree 
  • Working professionals or accountants looking to update their CV with new skills 

Read – Everything you need to know about the benefits, salaries and other aspects of the IFRS course

How the Proschool IFRS course can help you 

Before you can use the IFRS 9 standards, you need the proper certification. When you join a coaching institute like IMS Proschool, you are one step closer to achieving your goal to become a future-ready accountant. At Proschool, you get the advantage of a high-quality learning environment. Your training and skill development are in the hands of an efficient and experienced staff of teachers who are also IFRS professionals. They use active learning methods and interactive techniques to help students grasp concepts better. The professors are also known to mentor students and offer personalised assistance. Proschool has collaborated with the NSE academy to help you learn international accounting standards and become a highly sought-after IFRS expert in the field. 

More details about the IFRS course:

  • It is a three-month course 
  • The coaching centres are available in Mumbai, Navi Mumbai, Pune, Gurgaon, Delhi, Bangalore, Hyderabad, Chennai and Kochi
  • Online classes are also available 
  • There are many exclusive resources to help enhance your learning experience
  • The placement program aids students with interview grooming and resume writing 

In Conclusion 

The IRFS 9 is an improvement on the previous IAS 39 standard, offering modifications that allow for a better overall experience. It is easy to incorporate and adjust once you have a proper understanding of the IFRS 9 summary. The accounting standards and practices are updated on occasion to ensure all processes run smoothly. As corporations and financial markets evolve and change, the IFRS board ensures their regulations are up to speed. When you are a global accountant, you need to keep your eye on the latest developments and stay educated on all advancements. Whether it’s the IFRS 9, 16 or any future accounting codes. 

Learn more about the IFRS standards and practices here

To give a global dimension to your accounting career, get trained in IFRS. Join the IFRS Certification course in association with the NSE Academy.