The State Bank of Pakistan (SBP) has granted an extension for the implementation of IFRS 16 for banks, development financial institutions (DFIs), and microfinance banks (MFBs) in Pakistan. The new deadline for compliance has been extended from January 1, 2019, to June 30, 2019.
According to a circular issued by the SBP on Thursday, the decision was taken after receiving numerous representations from financial institutions citing challenges in implementing the International Financial Reporting Standard (IFRS) 16 within the previously stipulated timeframe.
The SBP stated, “It has been decided to extend the implementation date of IFRS 16 for banks/DFIs/MFBs in Pakistan from January 1, 2019, to June 30, 2019.” This extension is aimed at providing institutions with additional time to align their internal systems, procedures, and reporting frameworks with the requirements of IFRS 16.
The circular further advised banks, DFIs, and MFBs to utilize the extension period to adequately prepare for the adoption of the new standard. This includes upgrading accounting systems, training personnel, and reviewing lease arrangements in light of the new financial reporting obligations under IFRS 16.
However, the SBP clarified that any financial institution that has already implemented IFRS 16 may continue to prepare its financial statements in compliance with the standard. The IFRS 16 standard significantly changes the accounting treatment for leases, shifting many off-balance sheet leases onto the balance sheet, thereby enhancing transparency.
The SBP reaffirmed its commitment to promoting internationally recognized accounting practices while ensuring a smooth transition for the country’s financial sector.