The current model in IAS 39 requires an entity to account for credit losses in financial assets only if an event (or a combination of events) has occurred that has a negative effect on future cash flows and that effect can be reliably estimated (this is known as the incurred loss model). A feature of that model is that an entity is not permitted to consider the effects of future expected losses. The financial crisis has highlighted this as an area of concern. Responding to the request of the G20 leaders and others the IASB is reviewing that approach and examining the expected loss model as an alternative.

The IASB is requesting input on the practical issues that might arise if the expected loss model is adopted.  The deadline for submission of responses is 1 September 2009.  If you have a comment please post it below.

To read the full IASB press release click here