IFRS Masterclass for Banks and Other Financial institutions (3 days)

Introduction

Applying IFRSs presents significant challenges for financial institutions. The accounting requirements for financial instruments also affect the related disclosures. Utilizing a highly interactive format, this course provides a comprehensive overview of the effects that the requirements have on the financial statements of financial institutions.

This three-day program offers invaluable guidance on meeting the requirements of current accounting principles and disclosure requirements. Coverage includes lending and repossessed assets, accounting implications of regulatory requirements, disclosures, and IFRS 13 Fair Value Measurement. The complex requirements of IFRS 9 Financial Instruments are discussed and explained. Numerous examples and illustrations are provided, including application of the effective interest method under various scenarios, retained servicing, loan commitments and financial guarantees, loan impairment and restructurings, derivatives and hedging and how IFRS 15 Revenue from Contracts with Customers applies to financial institutions. Where applicable, IFRSs are contrasted with US GAAP requirements.

The theory and application of the standards is demonstrated with illustrative examples, complemented by application of the standards in an interactive group environment utilizing case studies, model financial statements, and practical exercises.

This course answers questions such as:

• What are the current IFRS reporting requirements for financial institutions? When and how can financial instruments be reclassified?
• What are the accounting requirements for loan losses, repossessed assets, and fee income? How are effective interest rates calculated for various financial instruments?
• What principles apply to the recognition, measurement, impairment, and derecognition of financial instruments?
• How does the guidance in IFRS 9 apply to the ‘expected credit loss model’?
• What are the recognition and measurement principles for investment property?
• What are the significant changes that will result from applying IFRS 9’s hedge accounting?
• How are the disclosure requirements of IFRS 7 applied in practice?
• Which revenue streams in financial institutions does IFRS 15 apply to?
• What are the implications of the application of IFRS 16 Leases on the financial statements of banks and other financial institutions?

Learning Objectives

• Classify and measure financial assets under IFRS 9’s three categories
• Prepare the quantitative and qualitative disclosures for financial instruments required by IFRS 7
• Calculate impairment of loans and other financial assets under the expected credit loss model in IFRS 9
• Calculate the effective interest rates for various financial instruments common to the financial sector
• Determine the principles in relation to recognition and measurement of investment property in IAS 40
• Differentiate embedded derivatives between those that must be accounted separately and those that do not require separation from their host instruments under IFRS 9
• Apply the hedge accounting requirements
• Determine when IFRS 15 versus IFRS 9 applies to revenue recognition
• Apply the principles in IFRS 16

Who Should Attend

• Financial or management accountants with financial institutions
• Internal and external auditors of financial institutions reporting under IFRSs
• 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
• Professors and other instructors with educational facilities
• First-time adopters of IFRSs, seeking to analyze the options for, and implications of, applying IFRS 9 in their first IFRS financial statements

Topics

• Applying IASB standards applicable to financial institutions
• Financial Instruments
  • Classification and reclassification of financial instruments under IFRS 9
  • Fair value option
  • Fair value measurement (IFRS 13)
  • Recognition and measurement under IFRS 9
  • Derecognition (including retained servicing and REPOs)
  • Financial guarantees
  • Loan commitments
• Application of the Effective Interest Method
  • Computing the effective interest rate
  • Applying the effective interest method under various scenarios – live illustrations
    • Plain vanilla bonds
    • Variable rate instruments
    • Effect of prepayments
  • Applying the effective interest method after recognition of impairment losses
• Loans Receivable
  • Recognition and measurement
  • Fee income and loan origination costs (IFRS 15 and IFRS 9)
  • Impairment and restructurings
  • Interaction between IAS 21 (foreign currency issues) and IFRS 9
  • Repossessed assets
• Derivatives and Hedging (IAS 39 and IFRS 9)
  • Accounting for derivatives and embedded derivatives
  • Overview of accounting for the three types of hedges (cash flow, fair value, and net investment)
  • Hedge accounting documentation requirements
  • Termination of hedge accounting
  • IFRS 9 hedge accounting updates
• Financial Statements
  • Financial statement presentation (IAS 1, 7 and 8)
  • Review and practical application of IFRS 7 disclosure requirements
  • Capital disclosures required by IAS 1
  • Review of real world and model IFRS financial statements
• Implications of IFRS 16 Leases on the financial statements
• Investment Property (IAS 40) – brief overview
• IFRS 15 Revenue from Contracts with Customers
  • Overview – recognition of:
    • Asset management income
    • Insurance commissions
    • Credit card reward programs
• IFRS 1 First-time Adoption of IFRSs - reliefs from retrospective application
• Current outstanding project
  • Dynamic Risk Management (Macro Hedging) – progress on plan to include definitive requirements in IFRS 9

Teaching Method

• Group live instruction and interactive participation
• Description and explanation of IFRS technical requirements in clear and simple language
• Real-world financial statements of financial institutions to demonstrate IFRS presentation and disclosure requirements
• Illustrative demonstrations for calculating effective interest rates
• Case studies:
  • Recognition, measurement and fair value adjustments for financial instruments under IFRS 9
  • Application of the derecognition rules under IFRS 9
  • Determination of loan losses under IFRS 9
• Exercises to provide hands-on application practice
• Active participation is encouraged

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

Some familiarity with financial reporting for banks or other financial institutions under IFRS or US GAAP, or other national GAAPs. No advance preparation is required for this course.