Keeping pace with evolving accounting change is challenging for banks. The new accounting standard for financial instrument (IFRS 9: Financial Instruments) is being finalised and will result in a comprehensive change to way banks account for many transactions. The standard is likely to be complex and the magnitude of the changes that it is likely to bring should not be underestimated. Some aspects, such as the move to the expected loss model, are likely to be particularly operationally challenging. New judgments that may be critical to reported profits will have to be made and communicated to the stakeholders. Banks would likely feel the consequences throughout their organisations. If banks start planning now, the wave of change could open up opportunities for synergies in areas such as data collection, modeling capability and investment in systems and resources
The expected changes to accounting for financial instruments are not the only source of an impact of accounting changes for a bank. Other standards, for example those providing guidance on lease, insurance contracts and revenue are also subject to a comprehensive revision. Access our latest research and newsletters below to understand more.