close
Friday March 29, 2024

SECP defers new financial reporting standards for companies

By Our Correspondent
February 16, 2019

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) on Friday said it extended the deadline for implementing international standards for financial reporting on the demand of chartered accountants and companies.

“The SECP has deferred the applicability of the International Financial Reporting Standard (IFRS) 9 “Financial Instruments” for all companies required to prepare their financial statements in accordance with the requirements of IFRS,” the commission said in a statement.

The SECP said it deferred the applicability of IFRS 9 for reporting period/year ending on or after June 30, 2019, based on the recommendations of the Institute of Chartered Accountants of Pakistan.

“It is expected that the companies will benefit from the extension and will fully prepare themselves for transition to ensure complete compliance with IFRS 9 by the new effective date,” it added. The SECP, however, allowed early adoption of IFRS-9 for companies that want to apply the new standards.

In October 2017, the SECP notified IFRS 9, replacing the international accounting standard (IAS) 39 “Financial Instruments: Recognition and Measurement” with effect from reporting periods starting July 1, 2018.

“However, a number of companies have approached the SECP, requesting either relaxation from or deferral of the IFRS 9 due to non-availability of relevant data/estimates, increased complexity of the new impairment model, time constraint for finalisation of financial statements for the period ending on December 31, 2018, and peculiar circumstances of various companies facing the issue of circular debt,” the commission said.

The SECP is empowered, under section 225 of the Companies Act 2017, to notify financial reporting standards for the purposes of preparation of financial statements by companies.

Issued in 2014, the latest financial reporting standards replaced IAS 39. They got effective from 2018.

“IFRS 9 specifies how an entity should classify and measure financial assets, financial liabilities, and some contracts to buy or sell non-financial items,” London-based not-for-profit IFRS Foundation said on its website.

“IFRS 9 requires an entity to recognise a financial asset or a financial liability in its statement of financial position when it becomes party to the contractual provisions of the instrument. At initial recognition, an entity measures a financial asset or a financial liability at its fair value plus or minus, in the case of a financial asset or a financial liability not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial asset or the financial liability.”