Did you know that the implementation of Financial Reporting Standard No. 9 (IFRS 9) has been postponed once before? The previous date of implementation was January 1, 2019 due to concerns about the impact on many business sectors, especially SMEs, which are an important foundation for our country’s economic system. If businesses stumble or encounter obstacles, it could affect the Thai economy as a whole.
What is IFRS 9?
Financial Reporting Standard No. 9 on Financial Instruments, which was introduced to replace IAS39, was due to the “hamburger crisis”, which led to mortgage debt and resulted in losses for many large financial institutions and businesses in the United States, leading to bankruptcy and eventual closure. The crisis expanded into a global financial crisis, and Thailand was one of the countries that faced an economic slowdown as well. In short, IAS39 has loopholes and is too lax.
IFRS 9 consists of 3 main topics:
1) Classification and measurement
2) Impairment of financial instruments
3) Hedge accounting
Who is affected?
The principle of this IFRS 9 standard is that banks will be more stringent, namely, reserves will be set aside to support future results. Those at risk and affected are all businesses that use financial instruments, including all companies, both listed and unlisted. The bank will look at the risk within 12 months to see if there is a risk of impairment or if there is debt.
There are many ways to look at risk, such as whether there is a default, look at the next 12 months and if, assuming that there is no payment, until the time of assessment, there is a higher risk, the entire amount of financial reserves must be set aside, such as how much was lent, how much is the asset worth? The reserve must be set aside from the first day of knowing and the reserve must be set aside early on, which many people may see as difficult and creating too much of a burden. But on the other hand, we can view this reserve as an advantage, that at least we have a shield to protect our business from future damages.
When to start using it?
Financial Reporting Standard No. 9 is scheduled to come into effect on January 1, 2022, but some countries such as Malaysia and Singapore have already started using it. In Thailand, it is estimated that if it is used, banks will have to set aside an additional 25% – 30% of provisions, and accounting staff must be prepared to handle this financial standard.
Using IFRS 9 accounting standards has advantages and does not create additional impacts. In addition, it is more beneficial because it will make the accounts clearer. Triforce recommends that accounting staff and financial business groups should prepare in advance. We have IFRS9 solutions that will help you work more easily. You can contact us at
E-Mail : info@triforcegs.com or call : 02-235-2312
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Thanks for the video from: Allianz
