Accounting for provisioning for expected credit losses according to IFRS 9- Issues to consider for Vietnamese commercial banks in the period of Covid-19

Abstract

: Recognizing the benefits of applying international financial reporting standards (IFRS), many Vietnamese commercial banks have started to apply IFRS in recent years, especially IFRS 9 - Financial instruments. An important part of IFRS 9 is the introduction of an expected credit loss (ECL) model, whereby ECL needs to be recognized even before the loss event occurs, the model for calculating ECL not only based on past data, current conditions but also includes forecast information for the future. Covid-19 has been affecting macroeconomic fluctuations, thereby affecting the assumptions and measurement framework of ECL according to IFRS 9. The article summarizes the basic content of the ECL model according to IFRS 9, through synthesis and analysis of actual documents collected on the impacts of Covid-19 on the factors determining ECL, the article gives comments on the impact of Covid-19 on ECL provision accounting that Vietnamese commercial banks that are applying IFRS 9 need to consider in the near future.