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IFRS 9 Financial Instruments

IFRS 9 Financial Instruments

IFRS 9 Financial Instruments is the new accounting standard for that will have an impact on International banks and financial institutions worldwide. Numerous changes are in place, designed to make annual reports more meaningful to investors as well as simplify how auditors implement the rules and introduce safeguards to ensure that a severe credit crisis cannot emerge again

IAS 39, which is to be replaced with IFRS 9 and other standards include accounting and reporting requirements that are bureaucratic and the source of many mistakes and misunderstandings by the accounting profession. They often inhibit the provision of consistent and meaningful information to investors on the true economic effects of firms’ hedging strategies.

Our aim on the course is to outline recent developments in hedge accounting and to show how the rules can be implemented in practice. We use Excel spreadsheets as well as local examples to illustrate how the accounting policies are implemented across GCC, Europe, Asia, and Africa.

This course specifically focuses on the new rules and reporting standards contained in IFRS 9 which is designed for professionals who have experience of operating under IAS 39 and wish to gain an in-depth understanding of what’s new in IFRS 9 and the implications for the design, management, and reporting of hedging strategies.

From 1 January 2018 companies applying IFRS will be required to adopt IFRS 9, an accounting standard which has taken nearly ten years from the first draft to implementation, returns to a more prudent approach to impairment with the expected loss model, a business model test for classification and a relaxation of many of the prohibitively complex hedging rules from its predecessor IAS 39. Whilst the financial services sector will see the most significant impact, IFRS 9 implementation will have a significant impact on all companies with most commentators saying that IFRS 9 is good for corporates. Find out why.

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This course is endorsed by ACCA Global.

YOU WILL LEARN HOW TO

Your study will increase your knowledge and understanding of IFRS while teaching you how to apply these standards. With your certificate in hand, and you’ll be familiar with the structure of the framework of international accounting, know how to apply the standards to key elements of financial reports, identify and apply disclosure requirements for companies in financial reports and notes, and prepare group financial statements including subsidiaries, associates and joint ventures.

IMPORTANT COURSE INFORMATION

Participants who fully attend this course and complete the test on the last day will receive a Strategic Axis Professional Certificate (SAPC). SAPC certificates are regionally recognized and can be quite valuable when applying for more senior roles within the organization or outside.

Exam

A number of exams:
One exam (split into two sections)

Types of questions:
Section A: One ‘groups’ questions (40 marks)
Section B: Three scenario questions (60 marks)

Duration:
3 hours (closed-book exam)

Scoring:
A minimum score of 50 percent is required to complete the exam

Exam Dates:
June 9
December 9

COURSE OUTLINE

Modules

Module 1: Objectives of IFRS 9

Requirements for recognizing financial assets and financial liabilities

Principles-based v Rules-based accounting

Reducing complexity in reporting financial instruments

Lessons from the Financial crisis

Module 2: IFRS 13 Fair Value Measurement

Impact of the revised definition of fair value

Level one two and three assets

Recurring and nonrecurring assets

Disclosure requirements

Observable and non-observable inputs

Module 3: Replacement of IAS 39

Classification and measurement of financial assets and financial liabilities

Impairment methodology

Hedge accounting

Impact of change in accounting Framework

Module 4: Impairment Methodology

Objective Evidence and elimination of threshold for impairment

Expected credit losses

One year v Lifetime expected losses

Practical application guidance

Module 5: Hedge Accounting

Aligning hedge accounting with risk management Accounting for open portfolios and macro  hedging Fair value hedge of an interest rate portfolio

Accounting policy choice ­ applying existing hedge requirements of IAS 39 or new requirements of IFRS 9

Module 6: Recognition and Derecognition of financial assets

Risks and rewards of ownership

Beneficial interest

Control over an asset and accounting implications

Off-balance sheet accounting

Module 7: Impact between IFRS 13 and IFRS 9

Level one assets

Level two assets

Level three assets

Operational risk and conflict of interest

Module 8: Application of IFRS 9

Subsidiaries and accounting treatment under IFRS 10,11 and 12

Lease accounting IAS 17

Derivatives embedded in leases

Pension accounting IAS 19

Module 9: Review of Accounting Standards

Hedge Accounting

Mark­to­market V Cost

Credit Value Adjustment

Hedging Rules

Case Study First Rand Group Accounting Policies

Module 10: IFRS 9 – Classification of Financial Assets

Business Model and Cash Flow characteristics

Reclassification of assets

Applying the Fair Value Option to banks

Subsequent measurement

Module 11: Accounting for Derivatives and Embedded Derivatives

Role of embedded accounting rules

Changes under IFRS 9

Case Study Accounting for Structured Products under IFRS 9

 

Module 12: Hedge Accounting – the new rules

Three types of hedge, cash flow, fair value and hedge of a net investment

Other Comprehensive Income

Problems with hedge accounting

Time value and Intrinsic Value of Options

Module 13: IFRS 9 Hedge Accounting – New Qualifying Criteria

Qualifying hedges under IFRS 9

Equity Investments and Comprehensive Income

Available for Sale, Held to Maturity changes

Module 14: IFRS 9 Hedge Accounting – Effectiveness Assessment

Quantitative and Qualitative controls

Testing for hedge effectiveness under the new rules

Documentation

Procedure for audit

Case Study  ­ Hedging and Documentation for Foreign Exchange Transaction

 

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