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IFRS 9 Financial Instruments (2 days)
IFRS 9 is effective from 1 January 2018 and replaces IAS 39 Financial Instruments: Recognition and Measurement. It introduces a logical, more principles-based approach to measurement and classification of financial assets based on an instrument’s cash flow characteristics and the entity’s business model. The new forward looking impairment model requires earlier recognition, and ongoing evaluation of credit losses. IFRS 9’s hedge accounting requirements are more principles-based and aligned to common risk management practices.
This 2 day IFRS 9 Financial Instruments course provides an in-depth analysis of IFRS 9’s principles. participants will be provided with numerous illustrations and examples to explain the business model and cash flow characteristics test for classification of financial assets, amortised cost and fair value measurement of financial liabilities and financial assets, de-recognition of financial assets (continuing involvement, retained servicing, etc.), measurement of expected credit losses and the accounting and impact of different types of hedges on financial statements. In addition, it covers the disclosures in IFRS 7 and the principles of fair value measurement in IFRS 13.
The course is designed to help preparers and users of financial statements to evaluate the impact of IFRS 9 on the business and its financial statements.
Suitability - Who should attend?
This training course is especially suitable for:
- Financial and management accountants in corporate and financial institutions
- Staff in treasury, operations, risk management, IT or compliance departments
- Internal auditors of entities reporting under IFRSs
- External auditors with clients facing the complexities and challenges in adopting and implementing IFRS 9
- Staff and management of Central Banks, Deposit Insurance Entities, and other agencies with regulatory responsibility in the financial services sector
- Financial analysts seeking to improve their understanding of the accounting and disclosures related to financial instruments and the changes introduced by IFRS 9
- Professors and other instructors with educational facilities
- First-time adopters of IFRSs, seeking to analyze the implications of applying IFRS 9 initially
Outcome / Qualification etc.
This course is beneficial to preparers and users of IFRS financial statements. The participants will learn the principles in IFRS 9, and its application.
- Classify and measure financial assets under the three categories in IFRS 9
- Analyse the impact of IFRS 9 on the classification of financial assets, including embedded derivatives
- Classify and measure financial liabilities under the two categories in IFRS 9
- Evaluate the principles of fair value measurement in IFRS 13
- Apply the principles in relation to de-recognition of financial assets
- Calculate the impairment loss on loans and other financial assets under the expected credit loss model in IFRS 9
- Analyse the estimates and judgements in the expected credit loss impairment model
- Apply the hedge accounting model in IFRS 9 and learn how it is aligned more closely to common risk management practices compared to IAS 39
Training Course Content
This course is designed to cover the following key topics:
- IASB standards applicable to financial instruments: IAS 32, IAS 39, IFRS 7, IFRS 9 and IFRS 13
- Introduction to IFRS 9
- Definition of financial assets, financial liabilities and equity instruments
- IAS 32Financial Instruments: Presentation– financial liability versus equity instruments, compound financial instruments and offsetting
- Classification of financial assets and financial liabilities
- Re-cap of IAS 39 classification
- Solely Payments of Principal and Interest (SPPI) criteria
- Business model criteria
- Application of IFRS 9 classification model
- Amortised cost
- Fair value through profit or loss
- Fair value through other comprehensive income
- Fair value option
- Measurement of financial assets and financial liabilities
- Initial recognition including treatment of transaction costs
- Subsequent measurement (IFRS 9 and IFRS 13)
- Debt instruments
- Equity instruments
- Fair value movements due to changes in own credit risk and reporting it for financial liabilities designated at fair value through profit or loss
- Impact of reclassification of financial assets
- Overview of accounting for derivatives and embedded derivatives in IFRS 9
- CVA and DVA for credit risk on derivatives
- Amortised cost financial assets
- Recognition and measurement under IFRS 9
- Loan commitments
- Fee income and loan origination costs
- Financial guarantees
- Repossessed assets
- De-recognition principles
- De-recognition of financial assets
- Determining whether a “transfer” has occurred
- Transfer/retention of substantially all risks and rewards
- Determining whether an entity retains “control” and measurement of continuing involvement
- De-recognition of financial liabilities
- De-recognition of financial assets
- Impairment of financial assets
- Introduction to IFRS 9 expected loss model – background, scope and impact of the model
- Application of IFRS 9 expected credit loss model
- 12-month and lifetime expected credit losses
- Determination of significant increases in credit risk
- Measurement of expected credit losses
- Modified financial assets
- Simplification and practical expedients
- Purchase/origination of credit-impaired financial assets
- Individual and collective assessment of impairment
- Key estimates and judgements
- Hedge accounting
- Overview of hedging, accounting for different types of hedges and comprehensive examples to hedge interest rate risk and foreign exchange risk
- Issues with IAS 39 hedge accounting
- IFRS 9 hedge accounting model
- Hedging instruments
- Hedged items
- Qualifying criteria
- Hedge documentation
- Hedge effectiveness requirements
- Discussion paper on macro hedging (dynamic risk management)
- IFRS 9 transition requirements for classification of financial assets and financial liabilities, expected credit loss impairment and hedge accounting
- IFRS 7Financial Instruments: Disclosures
- IFRS 1First-time Adoption of IFRSs- relief from full retrospective application
The cost of this training course is £1850 + VAT for UK events, $2,600 for US events, and other 2,300 EUR for events in the EU.
In House Training
In addition to the scheduled dates and locations, IASeminars can also run this course as in house training, to meet the specific requirements of your team. Contact them here to request a customised training solution for your team.
IASeminars is an independent financial training company operating globally and specialising in international accountancy (IFRS & US GAAP, IPSAS). Originally founded in the UK in 2002, IASeminars has since expanded to become a successful worldwide organisation offering regular courses in...
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