Impairment methodology 

The IASB issued the Exposure Draft Financial Instruments: Expected Credit Losses on 7 March 2013.

The IASB proposals introduce a new ‘expected loss’ impairment methodology that would reflect deterioration in the credit quality of financial assets such as loan portfolios. The proposed model would require recognition of lifetime expected credit losses for financial assets whose credit risk has deteriorated significantly since initial recognition and a 12-month expected loss allowance for other financial assets.


The new model would apply to financial assets that are recognised on the balance sheet, such as loans or bonds, and measured either at amortised cost or at fair value with gains and losses recognised in other comprehensive income. It would also apply to certain loan commitments and financial guarantees.

The Exposure Draft is open for comment until 05 July 2013.



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Aura Giurcaneanu

Aura Giurcaneanu

Partner, Head of Audit and Assurance

+40 (744) 655 847

Angela Manolache

Angela Manolache

Advisory, Director

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