IFRS 9 follows a logical, principles-based approach to the measurement of financial assets based on the structure of the business model and the nature of cash flows. The forward-looking impairment model urges timely recognition, and continuous assessment of credit losses. The hedge accounting requirements are principles-based and aligned to common risk management practices.
This course provides an in-depth analysis of principles in IFRS 9. The course has numerous examples and illustrations to explain the business model and cash flow characteristics test for the classification of financial assets, amortized cost and fair value measurement of financial assets and financial liabilities, de-recognition of financial assets (retained servicing, continuing involvement, etc.), hands-on knowledge on calculating of expected credit losses (ECL), and the accounting and implications of using different types of hedges on financial statements.
Apply the principles for classification, measurement, and initial recognition of financial assets
Apply the expected credit loss (ECL) model and calculate impairment losses for financial assets
Compute the effective interest rate and apply the effective interest method for the measurement of financial instruments at amortized cost
Understand the principles of fair value measurement in IFRS 13
Apply the derecognition principles to financial assets and financial liabilities
Financial assets
Financial liabilities
Example of categories disclosure
Presentation of FI categories
Equity – FVOCI
Debt – FVOCI
Recycled vs Non recycled concept
Financial Asset at amortized cost
Financial Asset at Fair Value
Accounting for assets reclassification
Business Model Assessment
Application of Business Model
Contractual Cash Flows (SPPI)
Liabilities
Entity’s own risk (OCI vs P&L)
Objective of the IFRS 9 impairment model
Key Definitions
ECL VS incurred
ECL
ECL different approaches
ECL General Model
Inputs into ECL
Illustrative example:
PD approach
provision matrix
Measurement of ECLs
Measuring expected credit losses
Defining and measuring 12-month
and lifetime ECL
Measuring ECL
Movement in loss allowance
Movement in loss allowance Cont’d
Impairment requirements
Calculating interest under IFRS 9 ECL
General approach vs credit adjusted approach
Significant increase in credit risk
Assessing significant increases in credit risk - Lifetime ECL
Example of significant increase in credit risk
ECL disclosure example
ECL and rebuttable presumption
What is hedge accounting?
Hedge accounting IAS 39 requirements
Types of hedge accounting
Fair value hedge accounting
Cash flow hedge accounting
Net investment in foreign operation
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