United States

IFRS 9 and COVID-19


On March 27, 2020, the International Accounting Standards Board issued guidance regarding the application of International Financial Reporting Standards (IFRS) 9, Financial Instruments, in accounting for expected credit losses (ECLs) in light of the current uncertainty resulting from the COVID-19 pandemic. Among other matters, the guidance discusses that:

  • A number of assumptions underlying the accounting for ECLs to date may no longer hold in the current environment. IFRS 9 allows an entity to adjust its approach to determining ECLs in different circumstances, and an entity should not continue to apply its existing ECL methodology mechanically. 
  • In assessing forecast conditions, consideration should be given both to the effects of COVID-19 and the significant government support measures being undertaken.
  • If the effects of COVID-19 cannot be reflected in models, post-model overlays or adjustments will need to be considered. 
  • Because the environment is subject to rapid change, updated facts and circumstances should continue to be monitored as new information becomes available.
  • Entities are encouraged to consider guidance issued by applicable prudential and securities regulators regarding the application of IFRS 9 in the current environment.

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