Share with your friends

AASB 9 Financial Instruments – Transitioning: Practical guide

AASB 9 Financial Instruments: Practical guide

Depending on your organisation, transitioning to AASB 9 can be complex. If not already commenced, the time to start your transition journey and impact assessment is now.

Patricia Stebbens

Partner, Audit, Assurance & Risk Consulting

KPMG Australia


Also on

Finger pointing on tab against blue background

AASB 9 applies for reporting periods beginning on or after 1 January 2018.

The new financial instruments standard, AASB 9 Financial Instruments is effective from 1 January 2018. The new standard addresses classification and measurement of financial assets and liabilities, provides a new set of hedge accounting rules and prescribes new principles on the impairment of financial assets. The new standard is expected to have broad implications for entities across various industries, not just those in the financial services sector.

The transition requirements of the new standard are complex and require various assessments to be made at different points in time. Our publication Practical Guide: AASB 9 Financial Instruments – Transitioning will help you understand the principles, requirements and disclosures on transition to the new standard.


“AASB 9 transitioning rules are complex. Entities that are restating their comparatives may have to provide additional information to facilitate comparability.”

Patricia Stebbens
Partner, Department of Professional Practice

Transition principles

Classification and measurement (including impairment)

The three main transition principles for classification and measurement, including impairment, are:

  • apply the standard retrospectively – but there are exceptions
  • do not apply the standard to items that are derecognised at the date of initial application (DIA) of the standard
  • the choice of whether to restate comparatives or not – only if it is possible to restate without the use of hindsight.

Hedge accounting

The hedge accounting requirements of AASB 9 are applied prospectively except for the cost of hedging. Applying the hedge accounting requirements prospectively means that entities cannot backdate hedge relationships that are only allowable for hedge accounting under AASB 9.

Complexities of transitioning and various assessment points

In applying the classification and measurement requirements on transition to
AASB 9, there are two key dates where assessments are required to be made:

  • the date of initial recognition of the instrument and
  • the date of initial application of the standard.

Practical expedients are available to simplify the transition requirements

The transition provisions provide for a number of practical expedients relating to classification and measurement. These expedients relate to investments in hybrid contracts, financial assets with modified time value or prepayment features and instances where it is impracticable to retrospectively apply the effective interest rate method. Practical expedients are also available for impairment.

Find out more

Our Practical Guide: AASB 9 Financial Instruments – Transitioning publication provides an overview of the transition options and expedients.

It provides KPMG’s insight on the requirements and how to transition – practical examples of accounting for the transition and the expedients available under the new standard.

©2020 KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation.

Liability limited by a scheme approved under Professional Standards Legislation.

For more detail about the structure of the KPMG global organisation please visit

Connect with us


Want to do business with KPMG?


loading image Request for proposal