In a joint submission, CA ANZ and CPA Australia have expressed support for the proposed amendments to IFRS 9 and IFRS 7 regarding the classification and measurement of financial instruments. But we also urge for more clarity and less complex reporting requirements that are cost-effective, especially when they apply to basic financial instruments. 

We support the derecognition of financial liability settled with cash using an electronic payment system when the payment instruction is initiated (rather than when received by the payee). This solves the issue of recognition when the paying entity is not aware when the recipient receives the cash payment. However, there are concerns over the complexity of the proposed criteria for the derecognition of the liability. We also support an equal but opposite approach for the derecognition of financial assets settled with cash using an electronic payment system (i.e., when received rather than when the payment instruction is initiated) but the proposed amendments have not addressed this concern.

Feedback from our members also indicated interpretative challenges may arise where guidance is unclear in relation to:

• Contractual terms which are consistent with basic lending arrangements for the purpose of applying the solely payments of principal and interest test,
• Financial assets with non-recourse features, and
• Contractually linked instruments. 

We also recommend that the IASB reconsiders the scope of the disclosures (by evaluating the cost-benefit to improve usefulness), includes disclosure objectives, and removes duplicative disclosures