Regulatory Alerts2016-01-01
Circular No. 125: International Financial Reporting Standard No. 9
The Palestine Monetary Authority issued Circular No. 125/2016 to mandate all Palestinian banks to fully implement International Financial Reporting Standard No. 9 (IFRS 9) by January 1, 2018, transitioning from the previous early adoption framework to the final forward-looking Expected Credit Losses model. Banks must upgrade relevant information systems, establish internal cross-functional working teams, and submit a detailed implementation plan outlining the expected quantitative impact on financial instruments by December 1, 2016, followed by a formal quantitative impact study on their December 31, 2016 financial statements by May 31, 2017. Furthermore, all institutions are required to coordinate directly with external auditors to ensure compliance with the standard’s three-stage impairment measurement framework.
Palestine Monetary Authority
PALESTINE MONETARY AUTHORITY
Circular No. (125/2016)
To all banks operating in Palestine Date: Tuesday, July 12, 2016
Subject: International Financial Reporting Standard No. (9)
In continuation of Circular No. (2012/86) dated 07/06/2012 regarding the early adoption of International Financial Reporting Standard No. (9), and in light of the issuance of the standard in its final version in July 2014, which included the calculation of impairment losses on financial instruments based on the Expected Credit Losses model (forward-looking approach). All banks are requested to take the necessary measures and steps to implement the final version of the standard by the specified implementation date of 1/1/2018, while observing the following:
- Develop related information systems and begin collecting the necessary data and information to calculate impairment losses in accordance with the Expected Credit Losses model.
- Form an internal working team responsible for implementing the standard, comprising at a minimum officials from Risk Management, Credit Management, Financial Management, and Information Systems Management.
- Prepare a detailed implementation plan for the standard, which must include at a minimum an outline on measuring the expected impact on financial instruments covered by this standard inside and outside the statement of financial position, according to the three stages defined in the standard, and submit it by no later than 1/12/2016.
- Study the quantitative impact of implementing the standard on the bank's financial data as of 31/12/2016 and submit it by no later than 31/5/2017.
- Banks shall work and coordinate with the external auditor regarding all necessary steps and procedures for implementing the aforementioned standard.
Deputy Governor for Financial Stability Affairs
Supervision and Inspection Department
Ramallah - Palestine P.O. Box 452 | Tel: +970 2 2415250 | Fax: +970 2 2409922 Gaza - Palestine PO Box 4026 | Tel: +970 8 2825292 | Fax: +970 8 2844487 Email: info@pma.ps www.pma.ps