Amendments to the Classification and Measurement of Financial Instruments


The International Accounting Standards Board (IASB) has recently issued the following exposure draft (ED): 
Amendments to the Classification and Measurement of Financial Instruments.
This ED proposes narrow-scope amendments to the classification and measurement requirements in IFRS 9 Financial Instruments, and to the disclosure requirements in IFRS 7 Financial Instruments: Disclosures.

Key areas of interest for New Zealand

While the proposed amendments are narrow in scope, they cover matters that are topical in New Zealand. For example, the ED proposes to clarify the accounting for financial instruments with features linked to economic, social and corporate governance (ESG) factors – such as loans where the interest rate depends on the borrower achieving environmental targets. We understand that such instruments are becoming more common in New Zealand. The ED also includes proposals on the accounting for liabilities settled via electronic cash transfer – a common means of payment in New Zealand.   

The proposals

The proposed amendments respond to feedback received from the post-implementation review (PIR) of the classification and measurement requirements in IFRS 9, which concluded in December 2022.

The ED proposes amendments to IFRS 9 concerning:

  1. derecognition of a financial liability settled through electronic transfer —to clarify that an entity is required to apply settlement date accounting when derecognising a financial asset or a financial liability; and to permit an entity to deem a financial liability that is settled using an electronic payment system to be discharged before the settlement date if specified criteria are met.
  2. classification of financial assets—to clarify the application guidance for assessing the contractual cash flow characteristics of financial assets, including:
    1. financial assets with contractual terms that could change the timing or amount of contractual cash flows, for example, those with environmental, social and corporate governance (ESG) and similar features;
    2. financial assets with non-recourse features; and
    3. financial assets that are contractually linked instruments.

This ED also proposes to make amendments to the disclosure requirements in IFRS 7 for: 

  1. investments in equity instruments designated at fair value through other comprehensive income; and
  2. financial instruments with contractual terms that could change the timing or amount of contractual cash flows on the occurrence (or non-occurrence) of a contingent event.

Your feedback is important

We encourage you to read the ED and to share your comments with us. Your feedback will help inform our submission to the IASB.

The XRB is committed to adopting international accounting standards in the for-profit sector. Generally, once a standard has been issued by the IASB, the XRB then issues the New Zealand equivalent standard without further public consultation.

It is important that we receive comments from preparers, readers of for-profit financial statements and other stakeholders at this time. This will help the XRB when representing New Zealand’s views to the IASB during the development of this international standard.

The XRB will consider separately any proposed disclosure concessions for Tier 2 for-profit entities.

Your comments will help us ensure that the standard provides for appropriate reporting outcomes for reporting entities in Aotearoa New Zealand.

Accessing the Consultation Document

Commenting on the Proposals

This is your opportunity to comment on the proposals.

Please send your comments—both formal and informal—to the XRB by 7 June 2023, using the secure upload form below.

All comments received will be considered by the New Zealand Accounting Standards Board (NZASB) of the XRB and will form part of the feedback we share with the IASB.

You could also choose to send your comments directly to the IASB (due by 19 July 2023), by clicking on the following link  When submitting directly, we encourage you to also send a copy of your submission to the XRB (through the upload form below).

We intend on publishing all comments on the XRB website, unless they may be defamatory. If you have any objection to this, we will not publish them. However, they will remain subject to the Official Information Act 1982 and, therefore, may be released in part or in full. The Privacy Act 2020 also applies.