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IASB warns over early adoption of IFRS9

Wednesday 6 October 2010 - by Andrew Hickley

The International Accounting Standards Board has warned that companies which choose to adopt IFRS 9 principles early could face problems over comparability.

Speaking at an IASB meeting yesterday in London, director of standards for SMEs
Paul Pacter said that while he supports the allowance for earlier implementation of the improved principles, comparing companies using different standards may cause problems “possibly for years”.

Pacter says: “Early adoption has pluses and minuses. Normally a new standard is an improvement, and you’d like companies to adopt an improved standard as soon as they can. But the minus is that if some do and some don’t, sometimes years can go by and it is complicated in IFRS 9 because it is a phased process.

“We lose comparability among companies possibly for years. But since the decision was made in IFRS 9’s asset phase to allow early adoption, I think that I support allowing early adoption on the liabilities side. But my general inclination is that the loss of comparability outweighs the early use of the improvement.”

Firms are allowed to take up IFRS 9 principles before the agreed deadline of 1 January 2013.
IASB board members questioned whether companies that choose to adopt IFRS 9 before the mandatory deadline must adopt all finalised requirements of the directive that they do not already apply. The consensus was reached that they should.

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