SBFEA of Turkmenistan applies the most modern financial reporting standard
The State Bank for Foreign Economic Activity of Turkmenistan uses the most modern financial reporting standard — IFRS 9 "Financial Instruments".
The IFRS 9 standard was published by the International Accounting Standards Board (IASB) in 2014 and came into force on January 1, 2018. It establishes the procedure for the preparation and presentation of financial statements in the field of financial assets and financial liabilities, requirements for recognition and evaluation, impairment, principles for the recognition of expected credit losses.
IFRS 9 does not require adjustments to the classification of financial instruments. Banks, which usually have the largest number of financial instruments, assess whether the classification of each available instrument has been changed, if so – how.
Another difference between IFRS 9 and previous standards is the need to create a provision for impairment of financial assets based on expected credit losses. To do this, the expected loss model is used instead of the incurred loss model for financial assets (incurred loss). It implies an assessment of the impairment of financial assets based on events that have not only already occurred or are happening now, but also a forecast of future conditions, including macroeconomic ones.
The initiative to switch to a modern financial reporting standard was implemented within the framework of the joint project of SBFEAT and UNDP "Support in the field of business and digital transformation in the banking industry" project, which provides for the expansion of cooperation on the development of an innovative business model and digital transformation of the bank.
As part of the project, PricewaterhouseCoopers presented a number of methodological recommendations, taking into account the bank's internal regulatory documents. The result was the preparation of financial statements for 2019 by SBFEAT in accordance with IFRS 9. The bank has been applying International Financial Reporting Standards (IFRS) since 2012.
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