Two Lancaster University Management School researchers delivered important work to the leading global body for setting accounting standards.

Professor Argyro Panaretou and Dr Sam Rawsthorne, from the Department of Accounting and Finance, presented academic research examining credit risk-related disclosures at the May 2024 public meeting of the International Accounting Standards Board (IASB).

The IASB is the standard-setting board that develops the IFRS (International Financial Reporting Standards) Accounting Standards that are currently required in more than 140 jurisdictions and permitted in many more.

The discussion was based on a paper the duo co-authored with Dr Wendy Beekes.

Professor Panaretou said: “This was a fantastic opportunity for our research to inform international accounting standard setters. We identify substantial diversity in the granularity and disaggregation in credit risk disclosures.

“Our paper highlights several areas where disclosure could be improved and provides examples of good practice.”

The paper was commissioned by the IFRS Foundation and provides evidence to feed into the Post-Implementation Review of the impairment requirements in International Financial Reporting Standard (IFRS) 9: Financial Instruments, and credit risk disclosures in IFRS 7: Financial Instruments: Disclosures.

IFRS 9 was developed in response to the global financial crisis, following calls for more timely recognition of loan losses and a forward-looking impairment model. Impairment requirements in IFRS 9 deal with how an organisation should recognise expected credit losses for financial instruments – contracts, such as stocks, mutual bonds, bank deposits, and loans – that result in a financial asset in one entity and a financial liability or equity in another. Companies have different ways of valuing these assets and liabilities, which they present in annual and other reports.

IFRS 7 requires organisations to disclose information that enables users of financial statements to understand and evaluate how expected credit losses were determined.

The full paper from the Lancaster team can be found here: IFRS 7 Financial Instruments: Disclosures.

A recording of the IASB meeting can be found here: IFRS - IFRS webcast.