CBN orders OFIs on full compliance with FIRS 9

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The Central Bank of Nigeria has instructed the Other Financial Institutions to fully comply with the IFRS 9 (financial instruments).

The CBN stated this in a letter to all the OFIs on ‘Guidance note to Other Financial Institutions on the implementation of IFRS 9 (financial instruments) in Nigeria,’ which was signed by the Director of Other Financial Institutions Supervision, CBN, Mrs Tokunbo Martins, on Tuesday

The guidance note communicated supervisory expectations for the implementation of the new standard, especially in areas where the OFIs were expected to exercise considerable judgement and/or elect to use simplifications and other practical expedients permitted under the standard.

It also specified information to be submitted to the CBN not later than March 31, 2019, on IFRS 9 implementation projects, while requiring the OFIs to submit monthly status updates on the implementation projects starting from July 31, 2019.

To ensure a seamless implementation, the CBN stated that it had established a project team and also urged the OFIs to seek clarification if any, on the guidance notes.

The IFRS was adopted in Nigeria on January 1, 2012, as part of the measures to improve reporting practices, transparency and disclosures.

Nigeria’s adoption of the IFRS implied that all revisions to existing standards as well as new accounting standards issued by the International Accounting Standard Board must be adopted by all reporting entities, the CBN stated.

In July 2014, the IASB issued the final version of the IFRS 9 (financial instrument) to replace IAS 39 (Financial instrument: Recognition and measurement), requiring all reporting entities that had the IFRS to implement the new accounting standard by January 1, 2018.

The IFRS 9 prescribed 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” model with a forward-looking “expected loss” model.

According to the CBN, the implementation of the IFRS 9 willl entail the exercise of considerable judgement by the OFIs.


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