Liliya Rangelova


For nearly a decade, the International Accounting Standards Board (IASB) has been aware of the need to change the requirements for financial reporting of financial instruments in order to increase the relevance and readability of the information on them in the financial statements.

During the financial crisis, a significant weakness of the rules for valuation of financial instruments was highlighted, related to the delayed recognition of impairment losses on loans and other financial instruments. These shortcomings gave rise to the need to adopt an entirely new impairment model in IFRS 9 Financial Instruments - A Model of Expected Losses. The model was developed in response to the G20's call for a forward-looking approach to recognizing expected losses on financial assets. This report analyses the new general approach of expected impairment losses on financial assets, as adopted in the final version of IFRS 9 Financial Instruments. Although the report is of a strong theoretical and methodological nature, much of the conclusions drawn can contribute to the comprehension of specific provisions of the Standard and support their practical application.

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