Untitled

Abstract

Global financial crisis 2008 was a very close call of total systemic collapse in financial markets. This had urged the leaders of G20 to involve the key global accounting standards bodies for creating a single high-quality global standard. IFRS 9 "financial instruments" released in 2014 is a project of IASB to achieve that goal and its effective date is 1 January 2018. However, a poll found that 46% of 91 banks in the world (excluding some U.S. banks) believe not having adequate resources to implement the standard by 2018. That is why this research wants to figure out the preparation of banking industry especially HSBC Holdings Plc to implement the standard. Using an exploratory research method, the researcher has found out that HSBC has been well-prepared to implement the standard. The findings of this research also realize a certain extent of agreement to MacNeal's theory and positive theory introduced by Watts and Zimmerman.

Assessment of the Application of Ifrs 9 Requirements by South African State-Owned Entities

“…The business model entails how an entity manages the financial assets portfolios in practice to create cash flows by selling assets or collecting the contractual cash flows or both (Sichirollo, 2015). These factors aim to determine how financial assets must be measured, either at an amortized cost, FVOCI or FVTPL (Johannes et al 2018). Ha (2017) clarifies that the current assets that were classified as per IAS 39 such as receivables and loans, held to maturity and those available for sale have to be reclassified according to new categories in IFRS 9.…”

“…The shared effects of application of the "characteristics of contractual cash flow" and "business model" tests might lead to variations on the treatment of financial assets that are then measured at a fair value or amortized cost, as compared with that of IAS 39 (Johannes et al 2018). IFRS 9 established different criteria from that of IAS 39 to determine when amortized cost, FVOCI or FVTPL categories apply.…”

“…However, changes were only made to deal with own credit issues where entities opt to use fair value when measuring financial liabilities (Kvaal et al 2023). Johannes et al (2018) also identify that the financial liabilities' classification is basically unaffected where some liabilities are measured at a fair value but gain or loss concerning own credit risk changes should be part of other comprehensive income. Sichirollo (2015) notes that IFRS 9 adopted the prohibition stated in IAS 39 that the financial liabilities should not be reclassified.…”

“…Over the years, the compilers and users of financial statements raised criticisms and concerns in relation to accounting standards on financial instruments (Huian, 2012). In addition, the global financial crisis in 2008 became an early warning of a possible total collapse in the financial markets, where leaders of Group of 20 (G20) were urged to engage core international professional bodies of accounting standards for the creation of a particular high-quality international accounting standard (Johannes et al Muksin, 2018). Bischof and Daske (2016) state that new IFRS 9: Financial Instrument became the outcome of various forces contributing to the due process of International Accounting Standards Board (IASB).…”