Catherine Murphy (Kildare North, Social Democrats)
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284. To ask the Minister for Jobs, Enterprise and Innovation to outline her views on whether the accounting standard known as IAS 39 is fit for purpose with regard to rules adopted by banks when valuing assets. including loans; her plans to amend its instructions (details supplied); and if she will make a statement on the matter. [6140/17]

Mary Mitchell O'Connor (Dún Laoghaire, Fine Gael)
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International Accounting Standard 39 (IAS 39) entitled “Financial Instruments: Recognition and measurement” attracted adverse comment in the context of the financial crisis. Accordingly, IAS 39 has been replaced by International Financial Reporting Standard 9 (IFRS 9), “Financial Instruments”.

This newer standard is intended, in part, to address concerns with the “incurred loss” approach to the recognition of losses on loans that is used in IAS 39. IFRS 9 requires the recognition of expected credit losses on, inter alia, loans advanced by banks, so that it will no longer be necessary for a “credit event” to have occurred before credit losses are recognised, as was the case with IAS 39.

IFRS 9 will apply in the EU to IFRS financial statements for financial years beginning on or after 1 January 2018, with earlier application permitted. IAS 39 will then cease to apply in all but one specific instance.

IFRS 9 was adopted by means of Commission Regulation (EU) 2016/2067 of 22 November 2016 amending Regulation (EC) No 1126/2008 adopting certain international accounting standards in accordance with Regulation (EC) No 1606/2002 of the European Parliament and of the Council as regards International Financial Reporting Standard 9. Therefore, it will be a matter for the Commission to bring forward any proposals for amendment if it sees that as necessary. If so, any such proposals will be considered by the Council and the European Parliament.