IFRS 9: Financial instruments

Course overview
IFRS 9 Financial Instruments is a replacement standard for IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 (effective from 1 January 2018) introduces a logical, more principles-based approach to classification and measurement of financial assets based on the business model and nature of cash flows. The new forward looking impairment model requires earlier and more timely recognition, and ongoing assessment of credit losses. The hedge accounting requirements are more principles-based and aligned to common risk management practices.
This one-day course provides an in-depth coverage of IFRS 9 along with a recap of IAS 39, to enable participants to assess the business and financial implications of adopting the new standard effective from 1 January 2018.  

Learning outcomes
To enable participants to obtain an in-depth understanding of the requirements of IFRS 9 and its impact on banks, financial institutions and corporates:

  • Classify and measure the financial assets according to the three categories defined in IFRS 9
  • Classify and measure the financial liabilities according to the two categories defined in IFRS 9
  • Apply the principles in relation to de-recognition of financial assets
  • Measure the impairment loss on loans and other financial assets under the expected credit loss model in IFRS 9
  • Learn how the hedge accounting model in IFRS 9 is aligned more closely to common risk management practices compared to IAS 39
  • Understand the IFRS 9 transition requirements

Who should attend?
The course is useful for preparers and users of financial statements of corporate and financial institutions, in particular those dealing with accounting for financial instruments:

  • Staff in finance, treasury, operations, risk management, IT or compliance departments
  • Internal and external auditors
  • Regulatory staff
  • Analysts
  • IT staff involved in finance change/transformation 

PROGRAM OF THE SEMINAR
Registration
Presentation and Classification of financial instruments

  • Introduction to IFRS 9 and transition requirements
  • Presentation of financial instruments – financial liability versus equity (IAS 32)
  • Recap of IAS 39 classification
  • Solely Payments of Principal and Interest (SPPI) and Business models criteria
  • Application of IFRS 9 classification model
  • Amortised cost
  • Fair value through profit or loss
  • Fair value through other comprehensive income
  • Classification of financial liabilities

Practical case study: Application of IFRS 9 classification model

Measurement and De-recognition

  • Initial recognition including treatment of transaction costs
  • Subsequent measurement (IFRS 9 Amortised cost and IFRS 13 Fair value measurement)
  • Debt instruments
  • Equity instruments
  • De-recognition of financial assets
  • Determining whether a “transfer” has occurred based on “risk and rewards” and “control” criteria

Practical case study: Application of effective interest method to amortisation of discount, premium and transaction costs on fixed and variable rate financial instruments

Impairment of financial assets

  • Recap of IAS 39 incurred loss model
  • Introduction to IFRS 9 expected credit loss model – background and scope
  • Application of IFRS 9 expected credit loss model
  • 12 month and lifetime expected credit losses
  • Simplification and practical expedients
  • Key estimates, judgements and implementation challenges

Practical case study: Measurement of impairment (expected credit loss model)

Hedge accounting

  • Overview of hedging and accounting for different types of hedges
  • Hedging interest rate risk and foreign exchange risk
  • Issues with IAS 39 hedge accounting
  • IFRS 9 hedge accounting model
  • Hedged items and Hedging instruments
  • Qualifying criteria and discontinuation of hedge accounting

Practical case study: Accounting for cash flow hedges

Language
The training will be conducted in English.