Abstract
IFRS 9 was introduced to enhance financial reporting by providing a robust framework for financial instruments. Since the mandatory effective date for adopting IFRS 9, there has not been a crisis affecting financial statements and disclosures. Covid 19, as the first global pandemic, post-adoption of IFRS 9, introduced significant uncertainties for entities and raised concerns about its compliance. The Covid-19 pandemic heightened scrutiny on the adoption and compliance of the latest IFRS 9 standard that effectively replaced IAS 39. This limited scope dissertation assesses if JSE listed banks made appropriate disclosures for Covid-19 in their financial statements.
This study aims to analyse the impact of the pandemic on financial reporting, specifically by examining banks listed on the JSE for the financial years ending after the declaration of Covid-19 as a pandemic up to and including 2023 financial year ends. To better link this analysis to the financial reporting standards, the study will reference IFRS 9, focusing on how the pandemic has influenced banks’ application of this standard. The financial statements analysed were obtained from the websites of the respective banks. To gauge the appropriateness of the disclosures, a qualitative research approach was adopted, employing content analysis of financial statements alongside a self-formulated checklist. This checklist specifically addressed IFRS 9 disclosure requirements outlined by the standard through considering the guidance provided by the IASB in a document published on 27 March 2020 during Covid-19.
This study’s findings indicates that all 11 banks assessed provided appropriate and sufficient disclosures in their financial statements for the assessed periods. Although certain IFRS 9 disclosures were lacking thorough documentation due to immateriality being cited as the reason, the study concluded that the disclosures were adequate.
This study contributes to existing literature by evaluating the conformity of Covid-19 disclosures, in line with the IASB’s guidance of 27 March 2020, to the specification of IFRS 9. It adds to the ongoing disclosure on financial reporting standards, particularly considering the challenges presented by the pandemic. Furthermore, it suggests future research should encompass a wider range of industries, additional IFRS standards, and diverse research methodologies beyond content analysis.
Key words
Covid-19, banks, expected credit losses, IFRS 9, non-performing loans, uncertainty, disclosures.