The impact of the coronavirus pandemic is evolving rapidly. In March, we issued ‘Applying IFRS, Accounting considerations of the coronavirus outbreak’. Since then, a number of prudential and securities regulators, including the European Banking Authority (EBA), the European Central Bank (ECB), the European Securities and Market Authority (EMSA) and the Prudential Regulation Authority (PRA) in the UK (the ‘regulators’) have published guidance on the regulatory and accounting implications of the pandemic.
On 27 March 2020, the International Accounting Standards Board (the IASB or the Board) published a document for educational purposes, to help support the consistent application of accounting standards.1 The Board indicates that they have engaged closely with the regulators named above to encourage entities to consider that guidance. Therefore, this publication considers the regulatory guidance in addition to the points made by the Board. The Board emphasises that IFRS 9 Financial Instruments does not set bright lines or a mechanistic approach to determining when there is a significant increase in credit risk (SICR), nor does it dictate the exact basis on which entities should determine forward-looking scenarios to measure expected credit losses (ECLs).
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