Comparison: IFRS 9 vs IAS 39

IFRS 9 and IAS 39 are both accounting rules. These rules help companies keep track of money they lend, borrow, or invest. But there are big differences between them.

Old vs. New

• IAS 39 is the old rule.
  IFRS 9 is the new rule that replaces IAS 39.
  IFRS 9 was made to fix the problems in IAS 39.

1. How Money Items Are Grouped (Classification)

IAS 39

• Had too many groups.
  It was hard to decide where to put things.
  IFRS 9
• Has only 3 groups.
  It is easier to use.
  

2. When to Show Losses (Impairment)

IAS 39

• Showed a loss only when it already happened.
  This was called the incurred loss model.
  Bad news came too late.
  IFRS 9
• Shows losses early, even before they happen.
  This is called the expected credit loss model (ECL).
  It helps companies be better prepared.
  

3. Hedge Accounting (Protecting Against Risk)

IAS 39

• Had very strict rules.
  Many companies could not use hedge accounting.
  IFRS 9
• Has simpler, more flexible rules.
  More companies can show how they manage risks.
  

Why the Change?

In 2008, the world had a big financial crisis. People said IAS 39 hid losses too long. IFRS 9 was made to show risks earlier, help banks, and protect investors.

Summary Table

Area	IAS 39	IFRS 9
Classification	Many types, complex	3 types, simple
Impairment	Loss shown after it happens	Loss shown early (ECL)
Hedge Accounting	Hard to use	Easier to use

Final Words

IFRS 9 is better than IAS 39 because it:
✔️ Is simpler
✔️ Shows risks earlier
✔️ Helps companies tell the truth about their money

This is why IFRS 9 Software Solution replaced IAS 39 in most countries.