The December 2015, Issue 3 of KPMG ISG’s IFRS Newsletter: IFRS 9 Impairment – What Happened in December 2015? summarizes the December discussions of the IASB’s IFRS Transition Resource Group for Impairment of Financial Instruments. At that meeting, the ITG discussed issues submitted by stakeholders about the new expected credit loss model for financial instruments under IFRS 9, Financial Instruments. Generally, the ITG agreed with stakeholders that:
- When incorporating forward-looking scenarios, an entity should consider the range and probabilities of different outcomes;
- A charge card agreement might include no commitment to extend further credit;
- When determining the period over which an entity is expected to be exposed to credit risk, an entity should consider the credit risk management actions that management expects to carry out and that serve to mitigate expected credit losses (ECLs); and
- An entity may include cash flows expected from the sale of a defaulted loan in measuring ECLs.
The IASB will consider what action is required for each issue that stakeholders submit for consideration. Currently, no future ITG meetings are scheduled; however, the ITG Chair indicated that the ITG will continue to exist.