The International Accounting Standards Board (IASB) has confirmed that new International Financial Reporting Standards (IFRS 9) will go into effect by 2018, and financial institutions are already feeling the pressure as they prepare for the rules to come, according to an IASB statement.
To help financial firms with the transition, vendor Wolters Kluwer Financial Services has outlined three key steps to take in preparation for IFRS 9, which will replace the current IAS 39 standard:
- Perform an impact analysis within the organization in order to identify where the changes lie and how to adjust accounting policies more closely to existing business models;
- Ensure that the organization understands that the likely impact on IT systems is significant. IFRS 9 implementation should not be underestimated. Leveraging existing risk systems’ data alongside specific IFRS 9 models and adjustments can alleviate some of this impact;
- And conduct a parallel run for one year before 2018 to iron out any issues. To achieve this, organizations should ultimately implement an IFRS 9 solution by 2016.
“For those firms that have not begun preparations for IFRS 9 yet, the message is clear: time is ticking,” says Jeroen Van Doorsselaere, global subject matter expert, finance and performance at Wolters Kluwer Financial Services in a written statement. “One route to take would be to align the risk and finance functions, at least from a data perspective, meaning that risk data can be re-used and applied to certain IFRS 9 models, such as the expected loss model for impairment, which is due to be finalized at the end of July.”
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