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On your marks: are you ready for AASB 9?

On your marks: are you ready for AASB 9?

On 1 July 2018, two new accounting standards became effective for large parts of corporate Australia – AASB 15: Revenue from contracts with customers, and AASB 9: Financial instruments. This publication focuses on AASB 9 and highlights a number of important considerations for entities at the date of initial application (DIA) and their first year reporting under this new standard.



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The majority of corporate entities in Australia will be applying AASB 9, the new financial instruments accounting standard, for the first time as of 1 July 2018, the date of initial application (DIA) for an entity with a 30 June year-end.

The new standard provides a new model for the classification and measurement of financial assets, makes some minor amendments to the accounting for financial liabilities, provides a new set of hedge accounting rules and prescribes new principles for measuring and recording impairment of financial assets.

Upon adoption of the new standard entities will need to make a number of important decisions, many of which are irrevocable and therefore may have a significant impact on the financial statements.

The purpose of this publication is to highlight the key decisions and assessments that need to be made upon adoption of the AASB 9 and also to provide some practical approaches to compliance with the requirements of the standard, in particular the application of the expected credit loss concept for measuring impairment on financial assets such as trade receivables.


“AASB 9 is now live for the majority of corporate Australia and so the time has come for organisations to make a number of key decisions relating to how they will apply the new standard and to put those decisions into action.”

Patricia Stebbens
Partner, Department of Professional Practice

AASB 9 elections and assessments to be made

Entities will need to make a number of decisions at the DIA around:

  • Hedge accounting
  • Exemption from AASB 9 for insurance entities
  • Classification, measurement and impairment
  • Disclosure, including transitional disclosures and the restatement of comparatives.

Fair value for all equity investments

The cost exemption that was available under the previous financial instruments standard, AASB 139, is no longer available and therefore entities will need to estimate fair value for all equity investments by applying the principles in AASB 13: Fair value measurement.

Practical guide to provisioning

AASB 9 permits the use of practical expedients for calculating a provision for impairment on financial assets in accordance with the expected credit loss model. One method suggested by the standard is the use of a provision matrix.

This publication contains a practical guide for entities wishing to implement a provision matrix for the purposes of calculating expected credit losses on their trade receivables portfolio.

Find out more

Our On your marks: are you ready for AASB 9? publication provides useful information to help organisations make sure they address all of the key considerations relating to the adoption of the new standard.

For more of KPMG’s insights on the technical transitional requirements and how to apply these please refer to our Practical Guide: AASB 9 Financial Instruments – Transitioning publication which provides an overview of the various transition options and practical expedients.

© 2020 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved. Liability limited by a scheme approved under Professional Standards Legislation.

KPMG International Cooperative (“KPMG International”) is a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.

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