Overview

BCE.7 Many users of financial statements and other interested parties have told the IASB that the requirements in IAS 39 are difficult to understand, apply and interpret. They have urged the IASB to develop a new Standard for the financial reporting for financial instruments that is principle-based and less complex. The need to enhance the relevance and understandability of information about financial instruments was also raised by respondents to the Discussion Paper Reducing Complexity in Reporting Financial Instruments (published in 2008). That need became more urgent in the light of the global financial crisis, so the IASB decided to replace IAS 39 in its entirety as expeditiously as possible.

BCE.8 IFRS 9 is the IASB’s response to the need to improve and simplify the financial reporting for financial instruments. The IASB believes that the new classification and measurement requirements address the issue that IAS 39 has many classification categories for financial assets, each with its own rules for determining which financial asset must, or can be, included and how impairment is identified and measured.

BCE.9 Overall, the IASB’s assessment is that the classification and measurement requirements in IFRS 9 will bring significant and sustained improvements to the reporting of financial instruments because they: