IFRS 9 Financial Instruments (Virtual Classroom)

Introduction

This online IFRS training is being delivered live in 4 individual sessions which run on consecutive days. The sessions will run each day from 13:00 – 17:00 London (UK).

IFRS 9 has a logical, principles-based approach to measurement of financial assets based on the business model and nature of cash flows. The forward-looking impairment model requires timely recognition, and ongoing 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 classification of financial assets, amortised cost and fair value measurement of financial assets and financial liabilities, de-recognition of financial assets (retained servicing, continuing involvement etc.), measurement of expected credit losses and the accounting and impact of different types of hedges on financial statements. In addition, it covers the financial instruments disclosures in IFRS 7 and principles in relation to 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 financial statements.

Learning 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

Who Should Attend

• 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 IFRS
• 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 impending with IFRS 9
• Professors and other instructors with educational facilities
• First-time adopters of IFRS, seeking to analyse the implications of adopting IFRS 9 initially for accounting for their financial instruments

Topics

Session 1 (4 hours)

• 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

Session 2 (4 hours)

• 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

Session 3 (4 hours)

• 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

Session 4 (4 hours)

• 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

Teaching Method

• Live group internet instruction in a face to face and virtual format
• PowerPoint presentations with demonstrated examples
• Case studies and examples for participants to work through in the course
• Participant questions and group discussions on real life case studies
• All participants receive presentation slides for future reference
• Electronic copies of exercise and case study solutions will be available to participants
• This virtual training is being delivered live and online over 4 individual sessions. The sessions will run each day from 13:00 – 17:00 London (UK).

Instructors

Venue

CPE/CPD Accreditation

IASeminars is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: www.nasbaregistry.org.

 

Field of study: Accounting

Prerequisites

Basic understanding of accounting under IFRS or any national standards. No advance preparation is required for this course.