ISLAMABAD: The Institute of Chartered Accountants of Pakistan (ICAP) has released detailed guidelines for the application of the IFRS 9 Expected Credit Loss (ECL) Model on circular debt. This move aims to provide clarity and structure for companies dealing with financial assets linked to the Government of Pakistan through intercorporate circular debt.

Previously, the Securities and Exchange Commission of Pakistan (SECP) had temporarily postponed the implementation of the IFRS-9 ECL model for such companies. This deferment was set to last until the financial year ending on or before December 31, 2025. The delay was intended to allow ICAP time to develop comprehensive guidelines.

The SECP has indicated that these guidelines will support relevant companies in adhering to the IFRS 9 requirements concerning circular debt. The expectation is that this will facilitate the complete implementation of IFRS 9 for these companies within the prescribed timeline.