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Transition from PBE IFRS 9

BC11. Because the majority of the requirements in the proposed PBE IPSAS 41 were identical, or almost identical, to the requirements in PBE IFRS 9, the NZASB developed transitional provisions to minimise the amount of effort required to transition between the two standards. ED 2018-5 proposed that entities that had previously applied PBE IFRS 9:

(a) continue to classify, recognise and measure financial instruments in the same way – except as expressly permitted by PBE IPSAS 41;

(b) apply specific transition provisions in respect of the revised requirements such as to the designation of financial instruments with prepayment features that give rise to negative compensation;

(c) have the option of picking up the new hedge accounting requirements in PBE IPSAS 41 on adoption of PBE IPSAS 41, even if they did not pick up the new hedge accounting requirements on adoption of PBE IFRS 9. However, any entities already applying the new hedge accounting requirements in PBE IFRS 9 would be required to apply the hedge accounting requirements in PBE IPSAS 41 (using the same designations and hedge accounting relationships at the point of transition); and

(d) apply most of the revised disclosure requirements in PBE IPSAS 30 retrospectively. BC12. Respondents supported these proposals.