IFRS 9 Impairment – ITG clarifies implementation issues

IFRS 9 Impairment – ITG clarifies implementation issues

This IFRS newsletter reports on the latest discussions on impairment of financial assets.

KPMG IFRS Newsletter: IFRS 9 Impairment publication image: rusting hull of a ship on a beach

We report on the third substantive meeting of the ITG in December 2015.

The new expected credit loss model for the impairment of financial instruments has triggered a variety of implementation issues.

At its third substantive meeting – in December 2015 – the IFRS Transition Resource Group for Impairment of Financial Instruments (the ITG) discussed a number of issues that were submitted by stakeholders.

For more detail on the ITG’s discussions, read Issue 3 of our IFRS Newsletter: IFRS 9 Impairment.

December discussions at a glance

ITG members provided useful clarification on a number of challenging practical issues. Some of the main points on which ITG members appeared to agree were as follows.

Incorporation of forward-looking scenarios The objective of IFRS 9 Financial Instruments is to achieve an unbiased and probability-weighted estimate of expected credit losses (ECLs). Therefore, when incorporating forward-looking scenarios, an entity should consider the range and probabilities of different outcomes.
Scope of paragraph 5.5.20 of IFRS 9 The Chair emphasised that the exception in paragraph 5.5.20 of IFRS 9 was meant for a narrow set of circumstances. It is relevant where there is an inter-relationship between the drawn and undrawn amounts that are not distinguished for risk management purposes.
Measurement of ECLs for charge cards A charge card agreement might include no commitment to extend further credit.
Period over which to measure ECLs for revolving credit facilities When determining the period over which an entity is expected to be exposed to credit risk (when applying paragraph 5.5.20), an entity should consider the credit risk management actions that management expects to carry out and that serve to mitigate ECLs.
Inclusion of cash flows expected from sale of a defaulted loan in the measurement of ECLs An entity may include cash flows expected from the sale of a defaulted loan in measuring ECLs.

Next steps

For each issue submitted, the IASB will consider what action – if any – is required.

Currently, no further physical ITG meetings are scheduled. However, the Chair indicated that the ITG will continue to exist, and should stand ready in case any subsequent issues for discussion emerge.

The Chair said that stakeholders could continue to submit questions, and that a decision would then be taken on next steps. One potential outcome would be the publication of educational material.

Find out more

Visitour IFRS Newsletters page for access to our latest newsletters on a range of major IFRS topics, including financial instruments and IFRS for banks and insurers.

And go to our IFRS – Financial instruments hot topics page for more on these and other aspects of financial instruments accounting under IFRS.

About the ITG

The purpose of the ITG is to:

  • solicit, analyse and discuss stakeholder implementation issues;
  • inform the IASB about those implementation issues, which will help the IASB determine what, if any, action will be needed to address those issues; and
  • provide a public forum for stakeholders to learn about the new impairment requirements from others involved with implementation.


The ITG does not have standard-setting authority, and its purpose is to advise the IASB.

ITG members include representatives from banks and audit firms. Certain IASB Board members and representatives from the Basel Committee and from the International Organization of Securities Commissions (IOSCO) are also observers at the meetings.

The meetings are chaired by an IASB Board member. The ITG’s agenda papers, prepared by the IASB staff, are publicly available and all meetings are held in public. Minutes of the meeting will also be made publicly available. 

© 2022 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.

Connect with us