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Financial Services – The impact of IFRS 9

27 July 2018

For financial services, IFRS 9 changes to accounting requirements are the biggest since IFRS was implemented in its entirety 12 years ago.

For the first time, financial institutions are being required to estimate and recognise future losses in their financial statements. When doing this they will need to consider wider economic events and extreme conditions that might cause losses. More financial instruments will be held at fair value, given changes to classification and measurement requirements. This change will have a far reaching and deep impact on businesses in the financial services sector, including increased volatility in earnings and required capital. We expect product pricing, portfolio composition, credit risk underwriting and management and the use of hedge accounting to be affected.

Immediate action on IFRS 9 for Financial Services

We are advising our clients, and others, to avoid further delay in tackling the implementation of IFRS 9. No company in financial services can afford to wait before beginning this process, as it will involve wholesale change across the organisation. Regulators have been clear that they expect to see high quality implementation of IFRS 9 and consideration of adverse yet plausible economic scenarios.

BDO Financial Services and IFRS 9

BDO’s Financial Services team has developed a 4 phase methodology for financial services companies to assess and manage their needs for implementing IFRS 9. We will work clients on each or all of the phases. The four phases are;

  • Gap analysis
  • Target operating model development
  • Implementation
  • Post implementation support

The BDO Financial Services team will work to ensure your transition to IFRS 9 is timely and effective and that your staff receive the training and support that they need to successfully manage IFRS 9. The team can also provide project management support and bring in subject matter experts covering regulatory, technology, internal audit, governance, tax and valuations and quality assurance.

Our team of 200 financial services specialists have deep knowledge and experience of working with standard-setters and the relevant regulators. This enables us to advise clients of regulatory developments and best practice.

BDO Financial Services team is part of the global BDO Financial Services practice with operations in the all major financial centres. Our clients have access to an international service that is led by a UK team dedicated to exceptional client service.

Please get in touch with Mark Spencer to discuss how we can help you with the implementation of IFRS 9.