IFRS 9 - Financial Instruments, introduced by the International Financial Reporting Standards (IFRS) Foundation, provides comprehensive guidelines on accounting for financial instruments' recognition and measurement. This standard replaced its predecessor, IAS 39, to enhance financial reporting's relevance and reliability when it comes to financial instruments.

The standard addresses the classification and measurement of financial assets and liabilities, ensuring they reflect their underlying business models and cash flow properties. Another key element of IFRS 9 is the implementation of a forward-looking impairment model based on expected credit losses (ECL). This replaces the previous incurred loss model, which only recognized losses when a default occurred, thereby allowing more timely loss recognition. Furthermore, IFRS 9 improves the guidelines for hedge accounting, allowing entities to better align their accounting with their risk management activities.

For instance, under IFRS 9, a financial asset might be classified as being measured at amortized cost, fair value through other comprehensive income (FVOCI), or fair value through profit or loss (FVTPL) depending on its intended purpose and cash flow characteristics. Similarly, a company employing derivatives to hedge its exposure to foreign currency fluctuations can achieve a more faithful reflection of these hedging strategies using IFRS 9's guidance. By improving transparency in financial reporting, IFRS 9 aids users of financial statements in making better-informed decisions.