The Influence Of IFRS 9 On China’s Banking Industry

In July 2014, International Accounting Standards Board (IASB) released the final version of IFRS 9 to reduce the complexity of financial instruments and improve the quality of accounting information, which will replace current IAS 39 in 2018, symbolizing a set of Financial Instrument Accounting Principle reflecting the business model and its characteristics of cash flow, adopting expected credit loss impairment model, covering general hedging accounting standards has been completed.China’s current financial instruments accounting standards is based on IAS39. As a result, we should attach great importance to the new changes in International Financial Instruments Accounting Standards in the trend of international accounting standards convergence. In September of 2009, China’s Ministry of Finance issued "China Enterprises Accounting Standard and International Financial Reporting Standard Convergence Road Map" (draft), pointed out that China’s Enterprises Accounting Standards will realize long-term sustainable convergence with International Financial Reporting Standards, which means that, as a member of IASB, China’s accounting standards of financial instruments will also face the IFRS 9 conversion problem.Since the vast majority of assets of China’s commercial banks are financial assets, the conversion to IFRS 9 will have great impact on China’s commercial banks. As a result, it is necessary to compare the latest version of IFRS 9 with China’s current accounting standards of financial instruments and explore the difficulties and feasibility of adopting IFRS 9 in our country.This paper explores the impact of adopting new IFRS9 to China’s banking industry based on the analysis of the difference between the new guidelines and the current accounting standards, discussing how to face the opportunities and challenges brought by the new standard, how to protect the legitimate rights and interests of investors and how to promote the steady development of China’s financial market.The main conclusions are:1. The financial asset classification methods of IFRS 9 is based on business model test and contract cash flow test, which is more logical and will not have significant impact on China’s banking industry, so it is necessary to achieve international convergence based on China’s actual conditions. Firstly, strengthening dialogue and coordination with IASB; secondly, improving the quality of fair value information; furthermore, enhancing banking risk management, internal control and talent resource construction. In addition, revised financial reclassification standard of IFRS 9 is applicable and feasible only after properly introducing business model pattern. Besides, since amendments of IFRS 9 about financial liabilities is applicable to China’s banking industry, it is proposed to align with the change of international accounting standard.2. For Asset Impairment Accounting Standard, the Expected Credit Loss Model of IFRS 9 is defective on theory and difficult in China’s banking practice, so it is recommended to take adequately cautious attitude until relevant problems are solved. First of all, solving the basic problems of accounting theory; secondly, constructing quantitative credit risk management system; furthermore, improving the efficiency of banking internal control and external credit infrastructure; the last, strengthening talent construction and cooperation between different departments.3. Revised hedging accounting standards is a good reference for China’s accounting standard setting, it is recommended to achieve international convergence on important concepts and general principles based on the following aspects:Firstly, improving China’s derivatives market; secondly, accelerate the launching of supporting accounting principles; Thirdly, enhancing risk management practice of China’s banking industry; The last, emphasizing the guiding and training of hedging accounting standards.