On Oct. 11, PAK SEC updated on later IFRS 9 implementation date.
PAK SEC has extended date of IFRS 9 applicability for non-bank finance companies (NBFCs) including non-bank microfinance companies (NBMFCs) and Modarabas.
Follows PAK CB Jul. 2022 implementation of IFRS 9 for different FIs, see #110365.
Background
IASB replaced IAS 39 with IFRS 9 effective from Jan. 1, 2018, new standard can have substantial market impact, NBFCs must make provisions for expected credit loss (ECL).
Under ECL approach NBFCs must consider current conditions and reasonable forward-looking information available without undue cost when estimating such credit losses.
PAK SEC states that at time of issuing update only 17 of 42 members of NBFI and Modaraba Association of Pakistan and two NBMFCs have adopted the IFRS 9 standard.
Extension
Extension to implementation date has been granted in wake of economic difficulties and capacity issues faced by the respective sectors in period post Covid-19 pandemic.
In addition, provides a level playing field for NBFCs and Modarabas in line with the extension granted by PAK CB and development finance institutions until Jan. 1, 2024.
PAK SEC encourages early adoption of standard, no more extensions will be granted.
NBFCs and Modarabas must formulate and submit action plans along with any other measures required for successful IFRS 9 standard implementation by Oct. 31, 2022.
Have also been directed to submit periodic status updates to PAK SEC no later than Dec. 31, 2022, Mar. 31, 2023, and Jun. 30, 2023, to ensure adequate preparations.
Effectiveness
Latest implementation date for NBFCs, NBMFCs, and Modarabas is Jun. 30, 2024.
Apr. 2024 Temporary ExemptionExtended
On Apr. 5, 2024, PAK SEC issued notification (of Mar. 29, 2024), which directs that temporary exemption from applying IFRS 9 financial statements, as given in IFRS 4 insurance contracts, is extended for annual periods beginning before Jan. 1, 2026.
Temporary exemption is subject to fulfilling conditions, as specified in the notification.
Document dated Apr. 5, 2024, received from PAK SEC Apr. 24, summarized Apr. 27.
Nov. 8, 2024 Temporary Deferment
On Nov. 8, 2024, PAK SEC temporarily deferred applicability of ECL model of IFRS 9.
Financial instruments for companies holding financial assets, due directly or ultimately due from PAK GVT in respect of intercorporate circular debt, until the financial year ending on or before Dec. 31, 2025; firms shall follow IAS 39 - financial instruments.
Chartered Accountants of Pakistan will issue guideline to assist relevant companies.
Document dated Nov. 8, 2024, received from PAK SEC Nov. 12, summarized Nov. 13.
Nov. 11, 2024 Press Release
On Nov. 11, 2024, PAK SEC issued a press release re the temporary deferment above.
Chartered Accountants of Pakistan guideline expected to be released by Dec. 31, 2024.
