IFRS 9 - Financial Instruments Basics To Expert

Banking and Financial Services

Course Overview

IFRS 9 is one such standard which is full of several jargons and new concepts. The standard has a profound impact on almost all business entities with particular impact on business entities in the Banking Sector. The emphatic mandate as posed by IFRS 9, surely would pose further stress on the already beleaguered Banking System, however, envisaged in the challenges is the glory of a stable, reliable and transparent system.

The course "IFRS 9 - Financial Instruments  Basics To Expert" is designed in a manner that it touches upon major key aspects of the standard. Further at every stage in the course, utmost care is taken to ensure that there is an elaborate explanation on all relevant terms and jargons used in the standard. Emphasis is laid on explaining several models and tests of the standard with the help of modern technology where the author walks through the diagrammatic and schematic presentations in a lucid manner. 

Course Objectives

This course is beneficial to preparers and users of IFRS financial statements. The participants will analyse the principles in IFRS 9.

  • Analyse financial instruments to differentiate between liabilities, equity, or a combination of both
  • Apply the principles for classification, initial recognition and subsequent measurement of financial assets and financial liabilities in IFRS 9
  • Evaluate the principles of fair value measurement in IFRS 13
  • Determine the accounting for derivatives and embedded derivatives
  • Compute the effective interest rate and apply the effective interest method for measurement of financial instruments at amortised cost
  • Apply the derecognition principles to financial assets and financial liabilities
  • Apply the expected credit loss model and calculate impairment losses for financial assets
  • Obtain an overview of hedge accounting and analyse the requirements in IFRS 9
  • Comply with the extensive disclosure requirements of IFRS 7
  • Analyse the impact of COVID-19 on IFRS 9 Application

Course Outline

  • Introduction
    • Introduction to IFRS 9
    • Recap of IAS 32 Financial Instruments: Presentation – financial liability versus equity instruments, compound financial instruments and offsetting
  • Classification of financial assets and financial liabilities
    • IFRS 9 Classification: Amortised cost, Fair value through other comprehensive income and Fair value through profit or loss
      • Business Models criteria
      • Solely Payments of Principal and Interest (SPPI)
    • Fair value option
  • Measurement of financial assets and financial liabilities
    • Initial recognition including treatment of transaction costs
    • Subsequent measurement
      • Amortised cost
      • Fair value measurement (IFRS 13)
    • Reclassification of financial assets
    • Fair value movements due to own credit risk in financial liabilities at fair value through profit or loss
    • Accounting for derivatives and embedded derivatives
  • Amortised cost financial assets
    • Computing the effective interest rate
    • Applying the effective interest method under various scenarios
      • Plain vanilla bonds
      • Variable rate instruments
      • Financial assets that are prepayable
    • Loan commitments
    • Fee income and loan origination costs
    • Financial guarantees
    • Repossessed assets
  • De-recognition principles
    • Derecognition of financial assets
      • Determining whether a transfer has occurred
      • Transfer/retention of substantially all risks and rewards
      • Retaining “control” and measurement of continuing involvement
    • Derecognition of financial liabilities
  • Impairment of financial assets
    • Introduction to IFRS 9 expected credit loss model – background, scope and impact of the model
    • Application of IFRS 9 expected credit loss model
      • 12-month and lifetime expected credit losses
      • Staging of financial assets
      • 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
      • Loan commitments and financial guarantee contracts
  • Hedge accounting
    • Overview of hedging and accounting for three types of hedges – fair value, cash flow and net investment hedge
    • Impact of hedge accounting for interest rate and foreign exchange risk
    • IFRS 9 hedge accounting model
      • Hedged items
      • Hedging instruments
      • Qualifying criteria
      • Groups and net positions
      • Hedge documentation
      • Hedge effectiveness requirements
      • Rebalancing
      • Discontinuation
  • IFRS 7 Financial instruments disclosures
  • Updates
    • Impact of COVID-19 on IFRS 9
    • Interest rate benchmark reform
    • Macro-hedging
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