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Financial Services

IFRS 9, IFRS 15, and IFRS 16 impact for both financial services and non-financial

Companies in the GCC need to be ready for three new IFRS accounting standards applicable for 2018 and 2019. 

IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers are both applicable for periods beginning on or after 1 January 2018. 

IFRS 16 Leases isapplicable for periods beginning on or after 1 January 2019. 

This article discusses some of the key areas these standards impact companies in the GCC region. For more information on any of the standards discussed in the article, please contact Grant Thornton Bahrain. 


IFRS 9 Financial Instruments

The high-level impact of IFRS 9 can be split into 3 key areas:

  • classification and measurement – companies will need to assess which new IFRS 9 classifications are appropriate for their financial assets at transition;
  • impairment – IFRS 9 moves from an incurred loss model under IAS 39 to an expected credit loss model which is more forward looking. IFRS 9 transition might influence both the size and timing of impairments;
  • hedging – IFRS 9 introduces several modifications to hedge accounting requirements, including increased eligibility of hedging.          

 IFRS 9 has been acknowledged by many as having considerable ramifications for the banking industry, particularly concerning impairment and creation of models relating to impairment assessment.

 But IFRS 9’s impact stretches far beyond the banking industry, affecting both financial and non-financial institutions. Insurance companies have the option to defer IFRS 9 until adoption of IFRS 17 Insurance Contracts, provided they meet the criteria for deferral under IFRS 4 Insurance Contracts (the current insurance accounting standard). Most other companies will need implement IFRS 9 from this year onwards.   


IFRS 15 Revenue from Contracts with Customers

IFRS 15 replaces both IAS 18 Revenue and IAS 11 Construction Contracts. The transition to IFRS 15 will affect many businesses differently. This article provides an overview, summarising the key changes.

 Revenue recognition under IFRS 15 moves from a ‘risk and rewards’ model to a ‘transfer of control’ model.

 The new standard introduces a 5-step model for measuring revenue from contracts with customers. The 5 steps are: 

1)       Identify the contract or contracts with the customer;

2)       Identify the separate performance obligations;

3)       Determine the transaction price;

4)       Allocate the transaction price;

5)       Recognise revenue when or as an entity satisfies performance obligations.

 For many companies, IFRS 15 adoption results in an adjustment to the timing of revenue recognition, and consequently, the amount of revenue recorded in the accounting period at transition.

 Both financial and non-financial institutions will need to assess their policies for recording revenue and evaluate client contracts for IFRS 15 impact.

 IFRS 15 also affects disclosures in the financial statements.


 IFRS 16 Leases

IFRS 16 has various considerations and modifications when compared to IAS 17 Leases, the existing accounting standard. The most significant of these changes is the requirement for lessees to account for operating leases as assets in the statement of financial position, as opposed to record as an expense in the statement of financial performance, i.e. many operating leases will no longer be recorded ‘off balance sheet.’ For lessees with substantial operating leases, this will result in a radical shift in amounts recorded in the statement of financial position and the statement of financial performance when transiting from IAS 17 to IFRS 16.

 Not all operating leases are affected. Exemptions do apply for certain operating leases such as short term leases and low value leases.

 There is also new and additional disclosure in the financial statements for both lessees and lessors under IFRS 16. In addition, there is new guidance on sale and leaseback accounting.

 IFRS 16 can be early adopted provided IFRS 15 has been applied.


 Start planning for the change

GCC financial and non-financial institutions will need to consider these three standards alongside the impact of VAT within the region.

 For more details on any of these standards, please contact Grant Thornton Bahrain directly.


About the Author

Niall McAuliffe


Grant Thornton Abdulaal



This article is solely to provide useful information to the readers. Views expressed are personal and they do not necessarily reflect the views of the Company and further, the views are not binding on any person. The author and publisher are not offering it as legal, accounting, or other professional service advice.