IFRS 9

The implementation of IFRS 9, Financial Instruments, has brought significant changes to how financial assets and liabilities are accounted for, particularly in the areas of classification and measurement, impairment, and hedge accounting. For Kenyan entities, navigating these new standards has presented a steep learning curve, and auditors are meticulously examining compliance. Here, we delve into […]

The adoption of International Financial Reporting Standard 9 (IFRS 9), effective globally from January 1, 2018, has fundamentally transformed how Kenyan financial institutions, including commercial banks, Microfinance Banks, and SACCOs, manage and account for credit risk, particularly concerning corporate loans and default risk. The core change is the shift from a backward-looking Incurred Credit Loss […]

The adoption of IFRS 17 (Insurance Contracts) and its interaction with IFRS 9 (Financial Instruments) marks one of the most significant changes to financial reporting for the insurance industry in decades, and Kenyan insurers are navigating this complex regulatory landscape. What are IFRS 17 and IFRS 9? IFRS 17 (Insurance Contracts): This new global standard, […]

The financial landscape in Kenya, much like the rest of the world, has undergone significant transformation with the introduction of IFRS 9 Financial Instruments. This international accounting standard has fundamentally changed how financial institutions recognize, measure, and disclose financial assets and liabilities, placing a particular emphasis on forward-looking expected credit loss (ECL) provisioning. For Kenyan […]

The global financial crisis of 2008 exposed a critical flaw in global accounting: the “too little, too late” problem of recognizing credit losses. When the crisis hit, banks were slow to provision for expected loan defaults because the prevailing standard, IAS 39 (Financial Instruments: Recognition and Measurement), only allowed them to recognize a loss after […]

The adoption of IFRS 9 Financial Instruments in Kenya, mandated by the Central Bank of Kenya (CBK), introduced a fundamental shift in how financial institutions (FIs)—especially commercial banks and smaller entities like SACCOs—calculate loan loss provisions. The move from the backward-looking Incurred Credit Loss (ICL) model (under IAS 39) to a forward-looking Expected Credit Loss […]

The transition from the Incurred Credit Loss (ICL) model of IAS 39 to the Expected Credit Loss (ECL) model of IFRS 9 has fundamentally reshaped credit risk management and Non-Performing Loan (NPL) resolution strategies for commercial banks in Kenya. Implemented since January 2018, IFRS 9 mandates a forward-looking approach, requiring banks to recognize potential credit […]

The International Financial Reporting Standard 9 (IFRS 9) marked a pivotal change in global accounting, moving financial institutions from the reactive ‘Incurred Loss’ (IAS 39) model to a proactive ‘Expected Credit Loss’ (ECL) model. For commercial banks, microfinance banks, and SACCOs in Kenya, building a robust IFRS 9 roadmap has been critical for strengthening financial […]

The implementation of International Financial Reporting Standard 9 (IFRS 9) has fundamentally changed how financial institutions in Kenya—including Microfinance Institutions (MFIs) and Savings and Credit Co-operative Societies (SACCOs)—account for loan losses. The shift from the backward-looking Incurred Credit Loss (ICL) model under IAS 39 to the forward-looking Expected Credit Loss (ECL) model under IFRS 9 […]

Exposure at Default (EAD) is a crucial risk parameter used by financial institutions, particularly banks, to estimate the potential loss they would face if a borrower (counterparty) defaults on a debt obligation. It represents the gross exposure of a bank to a facility or counterparty at the time the default occurs. EAD is one of […]