The application of the IFRS 9 International Financial Reporting Standard has influenced the determination of auditors' liability when auditing credit risks

Abstract

The research aims to determine the professional liability of auditors when auditing financial risks arising from the application of the financial reporting standard (IFRS 9), which includes the recognition of expected losses according to the projected credit loss model, which distinguishes this criterion from others by forming allocations to meet anticipated risks with a view to their early recognition). It also aims to reduce the professional and legal liability of the comptroller when performing audit tasks. It highlights the research problem of applying the requirements of applying the above standard as a result of increasing allocations which will be challenging and impeding for Iraqi banks; This requires auditors to prepare an audit plan based on the identification and assessment of the risks of each item of the financial assets according to the standard classification. This effect may result in financial failure and an increase in the professional and legal liability of the auditors. In order to achieve the objective of the research, the most important concepts of auditors' liability were discussed when auditing financial assets in accordance with international auditing standards and determining their professional liability when auditing credit risks. The research concluded that the expected credit loss model is better than the actual credit loss model by absorbing credit losses through the use of the credit loss recognition method at the moment of initial recognition of the financial asset and the adoption of a standardized model applicable to all financial assets and recommended that the Central Bank of Iraq establish clear bases for determining the provisions in the expected credit loss model under IFRS 9 in order to ensure uniformity of private practices in Iraqi banks.