THE International Accounting Standards Board (IASB) expects auditors and accountants to test run the International Financial Reporting Standard (IFRS) 9 in interim and annual financial reports by April 1 2017.
Source: Auditors, accountants urged to test run new financial reporting standards – NewsDay Zimbabwe September 16, 2016
BY TATIRA ZWINOIRA
IFRS 9 is an international financial reporting standard introduced by the IASB in July 2014 to improve financial reports.
The new standard consists of three main topics — classification and measurement of financial instruments, impairment of financial assets and hedge accounting.
Speaking yesterday in Harare at the KPMG IFRS and Business Seminar, KPMG senior manager (department of professional practice) Mametse Mokantse said adoption of the new standard has been slow due to lack of understanding.
“To be quite honest, there are very few entities that have chosen that option (early adoption) and the main reason for that is because it is an overhaul of IAS 39 requirements for financial instruments. There is extensive work required in order to be able to use it.
Because of that, it really deters people from early adopting,” Mokantse said.
This new standard will replace the earlier international standard for financial instruments “IAS 39 Financial Instruments Recognition and Measurement” to help guide accountants and auditors in their financial reporting.
Under the first section of the new standard, the classification and measurement of financial instruments will now be determined by how financial assets and liabilities were accounted for in financial statements.
Accountants and auditors will also be expected to look at how financial assets and liabilities were measured on an on-going basis.
Impairment of financial assets introduces a new expected loss impairment model that will require more timely recognition of expected credit losses while hedge accounting has been reformed with enhanced disclosures on risk management activity.
KPMG manager of financial risk management Nantes Kirsten said in Zimbabwe, the central bank has not fully embraced this new standard due to the ongoing economic situation. Kirsten said talks were in place to create awareness for the new standard.
“It is important that these banks allow for an examination of economic events in coming up with reports. There is a higher asset risk in this country as compared to others,” Kirsten said.
An awareness campaign is expected to go into effect to explain further on how auditors and accountants can utilise this new standard in the reporting of financial statements.
The IASB expects the full adoption of the new standard by January 1, 2018.