When measuring expected credit losses under IFRS 9 for revolving credit facilities – such as credit cards – determining the period of exposure presents challenges.

The IASB discussed this issue – which was previously raised by the ITG –
at its February meeting. Read Issue 4 of our IFRS Newsletter: IFRS 9 Impairment (PDF 494 KB) for more detail on the discussions.

The IASB staff provided a summary of the relevant requirements of
IFRS 9 and observations made by ITG members’ at their previous meetings.
This included the following.             

• In determining the period of credit exposure an entity is required to consider all three factors listed in paragraph B5.5.40 of IFRS 9 – i.e. the entity considers if and how its credit risk management actions affect the period of exposure.     
• If an entity chooses not to take credit risk-mitigating actions on some instruments, then this decision affects the expected life of the related financial instrument.
• An entity is required to consider the effects of its credit risk management actions to the extent that they mitigate credit risk

The staff informed the Board of their intention to develop educational material on this and other challenging areas – should the need arise – to support IFRS 9 implementation.

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