IFRS 9 Financial Instruments

Practical guidance and support

Our experienced team provides practical guidance on all aspects of IFRS 9, helping organisations understand and apply the requirements of the standard in practice. 

We support clients across a range of sectors with matters including classification and measurement assessments, expected credit loss modelling, hedge accounting and the implementation of recent amendments to the standard. 

For further details of how we can help, view our Financial Reporting Solutions page.

Overview of IFRS 9 ‘Financial Instruments’  

IFRS 9 ‘Financial Instruments’ sets out the accounting requirements for the classification and measurement of financial instruments, impairment of financial assets and hedge accounting. The standard applies to organisations across all sectors, not only those in financial services. 

Although IFRS 9 is now well established, organisations may still face practical challenges in its application, particularly in areas such as expected credit loss modelling, the classification of financial assets and the interaction between accounting and risk management activities. 

Hedge accounting requirements that aim to better align reported performance and financial position with a company’s risk management approaches.

Key areas of focus under IFRS 9

Classification and measurement 

Financial assets are classified based on the entity’s business model for managing those assets and the contractual cash flow characteristics of the instrument. Depending on the outcome of these assessments, financial instruments may be measured at: 

• Amortised cost 
• Fair value through other comprehensive income (FVOCI) 
• Fair value through profit or loss (FVTPL) 

Impairment – expected credit losses 

IFRS 9 introduced a forward-looking Expected Credit Loss (ECL) model for recognising impairment on financial assets. Entities are required to incorporate historical data, current conditions and reasonable forecasts of future economic conditions when estimating potential credit losses. 

Hedge accounting 

The hedge accounting model aims to better reflect an entity’s risk management activities in its financial statements. It allows organisations to align accounting outcomes more closely with how financial risks are managed in practice.  

The IFRS 9 hedge accounting model does not yet address portfolio (macro) fair value hedges of interest rate risk. Consequently, entities may continue applying IAS 39 for these specific macro hedging relationships until the IASB completes its comprehensive project on Risk Management Accounting.

FRS 9 insights and publications 

The following guides and publications provide useful information and advice on IFRS 9: 

IFRS at a Glance – IFRS 9 Financial Instruments 

A concise “key facts” guide summarising the main requirements of IFRS 9, including classification and measurement, impairment, hedge accounting, key definitions and available practical expedients. 

IFRS in Practice – IFRS 9 Financial Instruments 

A comprehensive publication providing detailed guidance and practical examples to support the application of IFRS 9 requirements. 

Amendments to the classification and measurement of financial instruments

On 30 May 2024, the International Accounting Standards Board (IASB) issued amendments to IFRS 9 and IFRS 7, effective for annual reporting periods beginning on or after 1 January 2026. Our publication explains the amendments and includes frequently asked questions on their practical implications.. 

IFRS in Practice – Applying IFRS 9 to related company loans 

Applying IFRS 9 to intra-group or related company loans can present challenges, particularly where loans are not issued on arm’s-length terms or lack formal documentation. This guide summarises the most relevant IFRS 9 requirements and provides practical examples of how they may be applied. 

How we can help 

Our specialists support organisations with a wide range of IFRS 9 related matters, including: 

• Assessing classification and measurement of financial instruments 
• Developing or reviewing expected credit loss models 
• Advising on hedge accounting designation and documentation 
• Evaluating the modification of the contractual terms of financial instruments 
• Considering the ability to offset financial instruments 
• Determining whether financial instruments are to be derecognised 
• Structuring financial instruments and transactions that contain them, such as securitisations, to obtain a desired outcome 
• Interpreting and implementing recent amendments to IFRS Accounting Standards 
• Supporting finance teams with complex technical accounting issues, for example, employee compensation embedded in financial instruments 

If you would like to discuss how we can help your organisation navigate the requirements of IFRS 9, please contact our team.