A new standard for the accounting of financial instruments


In 2014 the IASB (International Accounting Standards Board) issued the new standard (IFRS 9) for the accounting of financial instruments. The reason for this new standard is that many financial institutions experienced that the requirements in the current standard (IAS 39) were difficult to understand, apply and interpret. To address the deficiencies of the current standard, a new standard (IFRS 9) for the financial reporting of financial instruments that is more principle-based is being introduced. IFRS 9 replaces most of the guidance in IAS 39. The IASB decided to accelerate its project to replace IAS 39 due to the financial crisis. IFRS 9 is divided into three main phases:

  • Classification and measurement
  • Impairment
  • Hedge accounting 

Classificatie & waardering

The first phase of the IFRS 9 provides revised guidance on the classification and measurement of financial assets by introducing a fair value through other comprehensive income category for certain debt instruments. IFRS 9 requires that all financial assets are subsequently measured at:

  • Amortized cost
  • Fair value through other comprehensive income (FVOCI),
  • Fair value through profit or loss (FVPL)

Whether a financial asset is classified as amortized cost, FVOCI or FVPL is mainly based on the business model assessment and the SPPI-Test (Solely Payments of Principal & Interest).

The main change in the classification and measurement of financial liabilities is the recognition of changes in own credit risk in other comprehensive income for liabilities designated at fair value through profit or loss.

Related download

In Depth: IFRS9 Classification and Measurement


IFRS 9 contains requirements for a new impairment model which will result in earlier recognition of credit losses. The main difference with the current standard (IAS 39) is the change from using an incurred loss model to an expected loss model. The new requirements on impairment provide institutions with more useful information in their financial statements about their expected credit losses on financial instruments. With this information institutions can notice financial risks earlier.

Related download

In Depth: IFRS9 Expected Credit Loss

Hedge accounting

The new general hedge accounting requirements added to IFRS 9 reflect the IASB’s goal to simplify hedge accounting. The standard aligns also hedge accounting more closely with the risk management activities undertaken by institutions and provides decision-useful information about an entity’s risk management strategies. The new hedge accounting model makes it possible for institutions to present their risk management activities better in their financial statements and is more principal-based than the previous IASB model. The changes on hedge accounting include the requirements for the general hedge accounting. IASB is working on a separate project to address the accounting for hedges of open portfolios (macro hedge accounting).

Related download

General Hedge Accounting - Practical Guide

How can PwC help?

Our team has experience in helping financial institutions successfully complete the transition to new accounting standards. As well as helping you to get the numbers right and we can guide you through the operational challenges. Our flexible and scalable methodology focuses on effective knowledge transfer, in order for you to get lasting benefits. We can help you to prepare for IFRS 9 with:

  • Project management support
  • Technical and accounting advice and support tools
  • Learning and change management support
  • Valuation and impairment testing
  • Processes, data and systems

Contact us

Pieter Veuger


Tel: +31 (0)88 792 51 57

Sophie de Vries

Senior Manager

Tel: +31(0)88 792 64 58

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