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IFRS 9 Credit Impairment Modelling (3 days)

Course Details

Code:1216
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Introduction

The single most complex aspect of IFRS 9 is credit loss impairment. This is because IFRS 9 represents a very significant departure from the principles of its predecessor IAS 39. In terms of IFRS 9, entities are now required to estimate future losses. This requires very significant modelling and data capabilities in order to forecast the future.

Over 120 countries now require or permit the use of IFRSs. Over 7,000 public companies in the European Union have complied with IFRS since 2005. Most other countries are either adopting IFRSs or have decided to converge their national standards with IFRSs. Every one of these companies will be forced to confront the complexities of applying the impairment rules of IFRS 9. Implementation of IFRS9 impairment without a detailed understanding of its likely impact my result in adverse unforeseen consequences.

This program answers questions such as:

  • How are the new rules different from IAS 39?
  • What did IAS 39 require?
  • What does IFRS 9 require?
  • Why are the provisions so difficult to apply in practice?
  • What are the key functions in Excel required to model IFRS 9 impairment?
  • How to apply these functions in building an appropriate model?
  • How does one model expected losses?
  • What journal entries are required for IFRS 9 purposes?
  • What will happen to interest income recognition under IFRS 9?

Learning Objectives

  • Understand what the new rules are and how to interpret them in practice
  • Obtain a working model that illustrates the manner in which IFRS 9 models impairment
  • Apply the requirements of the standards to prepare IFRS compliant financial statements, including the determination of appropriate accounting impact on Profit or Loss and the Statement of Financial Position
  • Obtain tools to assist in quantifying the potential impact of IFRS 9 on first-time adoption
  • Acquire key insights to enable you to build an appropriate impairment model for your company
  • Become more competent at Excel modelling

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 IFRSs
  • 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 introduced by IFRS 9
  • Professors and other instructors with educational facilities
  • First-time adopters of IFRSs, seeking to analyze the implications of applying IFRS 9 initially

Topics

  • Introduction to IAS 39
    • Classification
    • Recognition
    • Derecognition
    • Embedded derivatives
    • Hedge Accounting
    • Impairment
    • Fair value measurement (IFRS 13)
  • Introduction to IFRS 9
    • Classification
    • Recognition
    • Derecognition
    • Embedded derivatives
    • Hedge Accounting
    • Impairment
  • A more detailed analysis of IFRS 9 impairment
    • What is an expected loss?
    • 3 stages of loans and the impact on accounting
    • Time value of money and PV of losses
    • Interest in suspense
    • The impact of impairment on interest income recognition
    • Indicators of impairment
    • Portfolio impairment
    • Individual impairment
    • Write offs
    • Detailed case study: Excel model of IFRS9 impairment

Teaching Method

  • Group live instruction by specialist instructor
  • Each delegate is required to bring a laptop with Excel
  • Delegates will build a worked example of an impairment model with the assistance of the instructor
  • They will also be provided with a useful working model
  • Use of case studies and real-world examples to illustrate practical application of the standard
  • All participants receive a comprehensive binder containing copies of the presentation slides, handouts and other course materials

Instructors

The instructor for this course will be drawn from one of our core faculty of subject matter experts. Further details will be published at the earliest opportunity.

Venue

Our seminars take place in 4 star professional conference facilities, generally in city-centre hotels like the Marriott, Sheraton or Hilton brands. Detailed Joining Instructions are sent to all registered delegates by email approximately one month before the event. The Joining Instructions will confirm exact venue details and nearby (or onsite) hotel recommendations with bedroom rates where available. Coffee and lunch will be provided.

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

No advance preparation is required for this course.

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