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Technical Resources
This webpage contains pronouncements, guides and articles that are relevant to
HKFRS 9 Financial Instruments.
Effective Date
Financial periods beginning on or after 1 January 2018.
Affected standards
Supersedes HKAS 39 Financial Instruments: Recognition and Measurement.
Why do we need a new standard
HKFRS/IFRS 9 was developed to make financial reporting for financial instruments more relevant and understandable. The reforms introduced by HKFRS 9 are consistent with requests from the G20, the Financial Stability Board and Others.
HKFRS 9 brings together the classification and measurement,impairment and hedge accounting phases of the IASB’s project to replace HKAS 39 Financial Instruments: Recognition and Measurement.
HKFRS 9 is built on a logical, single classification and measurement approach for financial assets that reflects the business model in which they are managed and their cash flow characteristics.
Built upon this is a forward-looking expected credit loss model that will result in more timely recognition of loan losses and is a single model that is applicable to all financial instruments subject to impairment accounting.
In addition, HKFRS 9 addresses the so-called ‘own credit’ issue, whereby banks and others book gains through profit or loss as a result of the value of their own debt falling
due to a decrease in credit worthiness when they have elected to measure that debt at fair value.
HKFRS 9 also includes an improved hedge accounting model to better link the economics of risk management with its accounting treatment.
Recent development
(a) Classification and measurement requirements
The International Accounting Standards Board (IASB) issued the completed version of IFRS 9 in 2014 and the standard has been effective since 2018. To help the IASB assess the effects of a new Standard after it has been effective for some time, the IASB started carrying out the Post-implementation Review (PIR) of IFRS 9 in 2021 and issued the first Request for Information (RFI) on the classification and measurement requirements in September 2021. The RFI seeks feedback on applying the classification and measurement requirements of IFRS 9 and related disclosures. The Hong Kong Institute of Certified Public Accountants (Institute) conducted various forms of outreach activities to solicit feedback from local stakeholders. In January 2022, the Institute submitted its comment letter to the IASB.
The IASB completed its PIR of the classification and measurement requirements in IFRS 9 and published the project report and feedback statement in December 2022. Feedback from stakeholders and research undertaken as part of the PIR show that the requirements set out in IFRS 9 are working as intended and provide useful information to the users of financial statements. In response to feedback on this PIR, the IASB initiated a standard-setting project to make narrow-scope amendments to IFRS 9 and an Exposure Draft Amendments to the Classification and Measurement of Financial Instruments (ED) was published in March 2023. The Institute submitted its comment letter to the IASB on the ED in July 2023. Additionally, the IASB has decided to add a project on Amortised Cost Measurement to its research pipeline
(b) Impairment requirements
In May 2023, the IASB issued the second RFI focusing on specific areas of the impairment requirements of IFRS 9 and related disclosures. The Institute conducted various forms of outreach activities to solicit feedback from local stakeholders. In September 2023, the Institute submitted its comment letters to the IASB. The submission and the comment letters received are available at the Institute’s website.
Upcoming activities
The IASB started discussing stakeholder feedback on the ED Amendments to the Classification and Measurement of Financial Instruments at its September 2023 meeting and will continue to deliberate the feedback in future meetings. The IASB expects to issue the final amendments in H1 2024.
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