CBN’s Guidance Note to MDBs on IFRS 9 implementation’ll drive disclosures
Banking analysts have noted that the newly issued Central Bank of Nigeria’s (CBN) initial Guidance Note on the implementation of International Financial Reporting Standard 9 (IFRS) to Money Deposit banks (MDBs) will raise the standard in financial disclosures.
It would be recalled that it was lack or poor compliance to disclosures that aided the collapse of some banks some years ago.
The reporting standard was adopted in the nation’s banking sector on January 1, 2012 as part of measures to improve reporting practices, transparency and disclosures in the sector. Nigeria’s adoption of the IFRS implies that all revisions to existing standards as well as new accounting standards issued by the International Accounting Standards Board (IASB) must be adopted by all reporting entities.
In July 2014, the IASB issued the final version of IFRS 9 (Financial Instruments) to replace IAS 39 (Financial Instruments: Recognition and Measurement) requiring all reporting entities that have adopted IFRS to implement the new accounting standard by January 1, 2018.
IFRS 9 prescribes new guidelines for the classification and measurement of financial assets and liabilities, making fundamental changes to the methodology for measuring impairment losses, by replacing the “incurred loss” methodology with a forward-looking “expected loss” model.
The Guidance Note communicates supervisory expectations for the implementation of the new standard, especially in areas where banks are expected to exercise considerable judgment or elect to use simplifications and other practical expedients permitted under the standard.
Experts say the Note also specifies information to be submitted to CBN not later than April 30, 2017 on IFRS 9 Implementation Projects while requiring banks to submit monthly status updates on the implementation projects starting May 2017.
But in order to deepen the success of the scheme, the apex bank has set up a project team where the banks are expected to seek clarifications with regards to the Guidance Notes.
In a circular from the CBn to banks sighted by Business Hilights, the apex bank said “To ensure a seamless implementation, the CBN has established a Project Team and banks are encouraged to seek clarifications, if any, on the Guidance Notes by contacting the Project Manager, Mr. C. D. Nwaegerue, via email on cdnwaegerue@cbn.gov.ng.”
