Home Specialist skills Finance IFRS – The Big Issues

IFRS – The Big Issues

Apply the key principles and requirements of IFRS 9, IAS 32, and IFRS 7 to account for financial instruments.
Calculate and record the initial recognition, subsequent measurement, and impairment of both financial assets and liabilities in compliance with IFRS 9.
Explain and apply the accounting treatment for complex financial instruments, including concessional loans, financial guarantee contracts, and purchased/originated credit-impaired assets.

Overview

Off the shelf (OTS)

Day 1 content

Financial instruments – applicable IFRS standards
• overview of key concepts, definitions and content
• the respective roles of IAS 32, IFRS 9 and IFRS 7
• IFRS 9 scope, definitions and key principles

IFRS 9 – Initial recognition
• The fair value requirement
• Fair value DCF-based methodology
• Application to below market interest loans (concessional loans)
• Transaction costs

IFRS 9 - subsequent classification and measurement - financial assets [1]
The basics
• Introductory overview
• Applicable measurement bases explained (AC, FVOCI, FTPL)
• The default measurement basis
• The business model approach
• Reclassifications

IFRS 9 - subsequent classification and measurement - financial assets [2]
Amortised cost and EIR
• The basic principle
• Fees and costs
• The amortisation period
• Some practical expedients

IFRS 9 - subsequent classification and measurement - financial assets [3]
Impairment and ECLs
• The 3-stage model
• Computational issues for stage 1, 2, and 3
• 12-month and Lifetime ECLs
• Understanding PD, EAD and LGD
• Objective evidence of impairment
• Effect of significant changes in credit risk and movements between stages
• Model applicability to assets purchased or originated credit impaired, undrawn loans and FGCs

IFRS 9 - subsequent classification and measurement - financial assets [4]
Fair value measurement
• Where relevant
• IFRS 13 definitions and measurement methodology
• IFRS 7 fair value disclosure

Day 2 content

IFRS 9 - subsequent classification and measurement – financial liabilities
• Applicable measurement bases explained (AC, FTPL)
• Classification and measurement- basics
• Classification and measurement- own credit risks

IFRS 9 derecognition - financial assets
• The IFRS 9 model based on risks and rewards and control passing

IFRS 9 derecognition - financial liabilities
• Basic rules
• Modifications and derecognition – qualitative and quantitative requirements and subsequent measurement issues

IFRS 9 focus area [1] financial guarantee contracts
• Recap of the accounting principles and some FGC calculation examples
• FGCs held
o How to apply IFRS
o The UKEF accounting policy paper and asset recognition (prepayment assets, compensation rights, assets and receivable from the reinsurer).

IFRS 9 focus area [2] assets purchased/originated credit impaired
• When will this happen?
• Applicability of EIR accounting and the ECL model

IFRS 7, 13 and financial instrument disclosure
• Disclosure objective
• The “significance” disclosures
• Disclosures around risks

IFRS 9 latest
• Recent amendments to the financial instruments standards
• The UK task force on ECL disclosure
• FRC thematic review

IFRS 17 and insurance contracts
Unearned Premium Reserve (UPR) accounting
• why appropriate for UKEF
• how UPR accounting works
• slimmed down disclosures.