Inter-corporate circular debt: SECP defers applicability of ECL Method of IFRS-9
ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has temporarily deferred the applicability of Expected Credit Losses (ECL) Method of International Financial Reporting Standard (IFRS)-9, financial instruments for companies holding financial assets, due directly or ultimately due in respect of inter-corporate circular debt, till December 31, 2025.
This temporary deferment/extension has been allowed considering the development of comprehensive guideline on the matter by the Institute of Chartered Accountants of Pakistan which will assist companies in applying the requirements of the ECL Method on circular debt situation which is specific to Pakistan and will pave the way for ensuring complete compliance with IFRS-9. The guideline is expected to be issued by December 31, 2024.
According to S.R.O. 1784(I)/2024 issued by the SECP on Monday, the SECP, in exercise of powers conferred by section 510 read with sub-section (3) of section 225 of the Companies Act, 2017, in partial modification of its previous S.R.O. 67 (I)/2023, dated January 20, 2023, has notified that, in respect of companies holding financial assets, due or ultimately due from the Government of Pakistan in respect of circular debt, the requirements contained in “IFRS-9 (Financial Instruments) with respect to application of Expected Credit Losses Method” shall not be applicable on such financial assets for the financial years ending on or before December 31, 2025.
Copyright Business Recorder, 2024
Comments