Overgangen til IFRS i den finansielle sektor: Konsekvenserne for bankers rapportering ved indførslen af IAS 39 samt IFRS 9

Helene Miris Møller & Elise Christine Phaff Møller

Student thesis: Master thesis

Abstract

Since 2005 Danish listed companies have been obliged to submit financial statements in accordance with IFRS. To ensure comparability, the Danish rules of accounting were simultaneously adapted to the international standards. The focus in this thesis is financial disclosure on financial instrument regulated in IAS 39. Because of the critique of IAS 39, IASB is developing a new and improved standard IFRS 9 that replaces IAS 39. IFRS 9 consists of three phases, of which the first is finished. The phases consist of: 1) classification and measurement of financial assets and financial liabilities, 2) impairment methodology and 3) hedge accounting. The objective of this thesis is to examine the impact of accounting standards on banks. We have examined which effect the transitions have had on the banks and whether IFRS 9 is an attempt to solve problems with IAS 39. The overall impact has been that banks no longer have the same opportunity to provision for losses on its lending. IAS 39 contains an incurred loss model, and IFRS 9 an expected loss model. The rules of impairment of IAS 39 have been criticized for being pro-cyclical and only allowing recognition of losses when there is identification of objective evidence of impairment. The corresponding rules of IFRS 9 allow banks to recognize losses earlier. However the model in IFRS 9 meets only criticism of the pro-cyclical effect during economic growth but not in recessions. Furthermore IAS 39 has been criticized for being too complex regarding recognition and measurement. This complexity has been reduced in IFRS 9. The obvious advantage of the transition to IFRS is an enhanced possibility for banks to fund abroad because of equal financial reporting standards that increases foreign investors’ understanding of accounts of Danish companies. Thus, Danish companies have gotten more competitive. Conclusively, the banks in Denmark were affected by the regulatory changes in 2005. Furthermore we found that financial reporting standards have no or little effect on the crisis in the financial sector. This is due to the fact that building up cash reserves - to withstand losses - happens in capital requirement standards. This has led to a misguided perception of what accounting really is.

EducationsMSc in Auditing, (Graduate Programme) Final Thesis
LanguageDanish
Publication date2012
Number of pages181