IFRS 9: Financial Instruments

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International Financial Reporting or IFRS is the global standard for financial reporting. Accounting for financial instruments is one of the more challenging and complex areas. The predecessor standard on financial instruments, IAS 39, was withdrawn and replaced by IFRS 9 on 1 January 2018.
The practicalities and challenges to be compliant with IFRS 9 require careful analysis and detailed planning for a successful transition.
This course is a pragmatic “how to do” focusing on implementation issues. Delegates will also understand the context: “what was” the standard and “what it is now”.
Instructor-led case studies, in-depth group discussion supported by examples and the “how to” (implement) will upskill delegates’ knowledge for a successful transition to IFRS 9 or -- for those entities that have already transitioned - be an enabling tool for continued compliance with IFRS 9.

المخرجات الرئيسية

Why the IASB transitioned from IAS 39 to IFRS 9 (the “what” and “why”).
The practicalities of how to model and determine compliant IFRS fair values.
How financial assets and liabilities are classified.
How to implement processes for the ECL model to tackle “staging”.
The updated hedge accounting standard
Plus: The course is supported by a series of case studies led by a course director with years of experience. His examples are thought provoking and elicit a significant amount of group discussion, so delegates learn the “how to”. This is not an academic course.

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محتوى الدورة التدريبية

Day 1
Initial Overview and Discussion of Key IFRS Principles and Concepts
→ The Global movement to IFRS
→ Central objectives and principles and how they impact IFRS
→ Key issues relating to fair value and reliable measurement
→ US GAAP core differences in financial instruments
→ Impact on principles vs rules-based approaches for financial instruments and how they are tackled in IFRS and US GAAP for financial instruments
Financial instruments - overview of core concepts and principles
→ Overview of standards used in accounting for financial instruments
→ Discussion of the how and why IFRS 9 replaced IAS 39
→ Financial instruments core definitions and principles
→ Determining cash and cash equivalents
→ Scope of financial instruments vs. insurance products
→ Concept of recycling
→ Trade and settlement date accounting
→ Offsetting of financial instruments
IFRS 13: Fair value
→ What is fair value?
→ Detailed discussion of concepts and principles and the characteristics of fair value
→ What the fair value hierarchy is all about and how it is used
→ Comprehensive coverage of the steps and the “how to” to determine fair value
→ The level 1 -3 valuation hierarchy and how it is used
→ Determining if a market is active
→ How to determine if inputs are observable or unobservable
→ Overcoming the challenges of arriving at fair value in illiquid markets
→ The grey areas and challenges of application for financial instruments that are thinly traded
→ Four step model for the determination of fair value
• Step 1: Selecting the unit of account
• Step 2: Valuation premise and asset grouping
• Step 3: Principal, most advantageous and hypothetical markets
• Step 4: Application of valuation techniques
− Cost approach
− Market approach
− Income approach
→ Tackling credit value and debt value adjustments
→ Concept of reliability in IFRS 13
Case Study: A significant number of exercises and case studies covering the fair value hierarchy, highest and best use concepts, valuations in illiquid markets, and developing the assumptions for the fair value model.
IAS 32: Financial Instruments – Presentation
→ Core definitions in financial instruments
→ Determining factors for derivatives and embedded derivatives
→ Scope of financial instrument standards
→ Distinction between debt and equity
→ Compound financial instruments
Case Study: Group discussion on complex example of intercompany / related party debt to determine if it should be accounted for as debt or equity; example on accounting for compound financial instruments.
IFRS 9: Classification of financial instruments / recognition and remeasurement
→ Categories of financial assets and the accounting treatment under IFRS 9: amortised cost, fair value through profit or loss, and fair value through other comprehensive income
• Making sense of the available alternatives
• Valuation issues for non- listed equities and how to overcome them
→ Computational aspects of effective interest rates
• Tackling fees, origination costs, loan servicing fees, and syndication costs
→ Application of the business model test
→ SPPI (solely payments of principal and interest components)
→ Harmful contractual features for amortized cost
→ What to do when contractual features modify the base rate
→ IFRS 9 requirements for valuation of nonlisted equity investments
→ Practical modelling and valuation techniques to overcome those challenges
→ Categories of financial liabilities and the accounting treatment under IFRS 9: fair value through profit or loss, amortised cost and when to bifurcate
IFRS 9 own credit controversy and when fair value to other comprehensive income must be used
→ Reclassifications
Case Study: Short exercises on classification; SPPI scenarios; own credit risk calculation.
Day 2
IFRS 9: Derecognition of financial instruments
→ Transfer of risk and rewards and control test for determining when to derecognise
→ Liabilities quantitative and qualitative tests for derecognition
Case Study: Analysing scenarios to determine if financial instruments should be derecognised.
IFRS 9: Accounting for derivative products
→ Criteria to assess a derivative
• The underlying
• Low or initial net investment and leverage feature
• Future settlement
→ Recap of core derivative products and how they are valued
Case Study: Valuation and accounting for an interest rate swap.
→ The Embedded derivatives
• How to identify the host and embedded derivative
• Assessment of economic characteristics / closely related factors
• The accounting aspects and the key steps
Case Study: Scenario with caps and floors to assess if closely related and valuation aspects; reviewing contracts for embedded derivatives.
IFRS 9: Intercompany Off Market Loans
→ Discussion of day one gains and losses
→ Exemption for day one gains and losses
Case Study: Examples on accounting for off market loans.
IFRS 9: Financial Guarantee Contracts
→ Determining what accounting standard to use
• Derivatives under IFRS 9
• Insurance under IFRS 4
• Revenue standard under IFRS 15
• Contingent liabilities under IAS 37
→ Initial and subsequent recognition and measurement of guarantees
• Derivatives on non-financial underlyings
• Undrawn commitments
→ Fair value considerations
→ Intercompany loan guarantees
Case Study: A couple of scenarios on guarantees and how they are accounted for including numerical calculations.
IFRS 9: Impairment of Financial Assets
→ Overview and rationale of the new standard
→ Equity assets at fair value through other comprehensive income
→ Financial assets held at amortised cost
Application of the concept of recycling
→ Moving from the incurred loss model to the expected loss model
• Core concepts and how to apply them in practice including what is default
• Probability of default
• Loss given default
Exposure at default
→ Three stage expected loss model
→ Three methods of impairments
• General model
Simplified model
• Special provisions
→ Differences in the US GAAP FASB model
→ Significant changes in credit risk
• Historical and forward-looking information
• Regulatory and IFRS perspective
• Indicators of changes in risk
Impact of collateral in risk assessment
• Using the top down or bottom up approach
→ Loan modifications (derecognition) and impact on impairment
→ Staging / how to monitor changes in risk
→ Forbearance, rehabilitation and probation
→ Disclosure requirements
Case Study: Numerous case studies on impairment: debt at amortized cost with recycling; assessment of top down bottom up approach; staging scenarios.
IFRS 9: Hedge Accounting
→ Hedge accounting concepts
• What can be hedged
Types of hedges
Cash flow hedges
Fair value hedges
• Hedge of net investment in a foreign entity
Highly probable forecast transactions / firm commitments
→ Derivative vs hedge accounting
→ Risk management strategy and risk management objective
→ Hedge documentation
→ Hedge effectiveness / ineffectiveness
Dollar offset method
→ Achieving, continuing and discontinuing hedge accounting
Case Study: Examples on determining the type of hedge / comprehensive example of cash flow and fair value hedge.

على من يجب الحضور؟

This highly practical and interactive course has been specifically designed for
This workshop is specifically designed for users and prepares of IFRS financial statements who require practical application in IFRS.
→ Banks and financial institutions that are using IFRS 9
→ Regulatory staff who require a working knowledge of the entities they oversee
→ Audit staff involved in the audit of financial institutions
→ Analysts in the financial sector
→ Corporates finance and accounting staff requiring this knowledge

الدورات ذات الصلة


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