Executive Briefing with Deloitte

Regulatory Changes and Opportunities under IFRS 9

Board members and representatives from functional areas such as Accounting, Risk Management, Compliance and Auditing attended an Executive Briefing late last quarter on “Regulatory Changes and Opportunities under IFRS 9” held by Christoph Meilen of Deloitte S.A. in Luxembourg and Dr. Karl Kirchgesser of FERNBACH-Software S.A. The goal of the briefing was to inform participants as to the upcoming changes to IFRS. The meeting also provided participants with a forum for discussions on the issue.

The presentation included explanations of the regulatory requirements financial services institutions will have to fulfil under IFRS 9 and dove into concrete approaches to the solution using practical examples. Participants also engaged in active discussions on the changes that the new standards will bring about.

Addressing the Weaknesses of IAS 39

The IASB (International Accounting Standards Board) is using the changes the IFRS accounting standards for financial instruments are going through to address ongoing public debate on and to meet increasing demand for simplified accounting regulations. These changes are necessary now more than ever due to the increased attention the financial crisis has brought to the weaknesses of current IAS 39 regulations. Not only are current accounting rules too complex, but, during an economic boom, financial instruments were valued too positively while the opposite reaction could be observed during economic downturns.

IFRS 9 reforms the existing standard IAS 39 Financial Instruments: Recognition and Measurement in a three-step plan. Following the first phase of including the categorisation and valuation of the active financial instruments in the new IFRS 9 standard, two additional phases will take place during which the determination of impairment and the requirements on hedge accounting will be revised. They will then go to be passed by the European Commission.