IFRS 9: The Latest Updates

Transcription

1 IFRS 9: The Latest Updates A detailed understanding of the latest IFRS 9 updates This course is presented in London on: 20 June 2018, 18 October 2018 This course can also be presented in-house for your company or via live on-line webinar The Banking and Corporate Finance Training Specialist

2 Course Objectives Participants will: Be introduced to the IFRS 9 and how it differs from IAS 39 Get an overview of financial asset classification and measurement. Have explained to them financial assets impairments Gain an understanding of financial liabilities and credit Learn about hedge accounting including its different types Course Overview Background of the trainer The trainer has 15 years of experience in accounting and investment banking at leading firms and is an experienced financial trainer who has delivered courses for financial institutions in the City of London and around the world, in the areas of Corporate Finance, Valuation (Industrials and Banks), Financial Modelling, M&A, LBO, Financial Accounting, Capital Markets, Bank Regulatory Capital, Financial Risks, both in English and French. Course Content Session 1 - Introduction What is IFRS 9? How does it differ from IAS 39? What are financial assets and financial liabilities? IFRS 9 history and implementation overview Session 2 Financial Assets Classification & Measurement Presentation of the three different categories Amortised Costs; Fair value through Profit & Loss (FVTPL); Fair value through Other Comprehensive Income (FVTOCI) Accounting treatment determined by (i) business model (ii) nature of cash flows Decision tree to decide on classification of financial instruments Balance sheet and P&L calculation of a bond at amortized cost Based on the Internal Rate of Return (IRR) of future cash flows Treatment of fees in the IRR calculation Balance sheet and P&L calculation of a bond at FVTPL and FVTOCI Effective interest rate method for interests (same as amortised costs) Unrealised gain based on NPV at current yield of future cash flows Reminder on determining fair value Level 1 based on unadjusted quoted price Level 2 based on quoted price in inactive markets or observable model input Level 3 based on unobservable but significant inputs to the overall value Case Study #1: participants will be presented with a few financial instruments and will classify them in their relevant categories Case Study #2: participants will compute on Excel the impact on balance and P&L for different types of debt & equity instruments Session 3 Financial Assets Impairments

3 Applies to amortized cost and FVTOCI mandatory fixed income instruments Incurred losses (IAS 39) has been replaced by expected losses (IFRS 9) Three stages process to determine impairments Stage 1: 12-month expected credit losses with effective interest rate on gross on gross carrying amount Stage 2: life-time expected credit losses with effective interest rate on gross on gross carrying amount Stage 3: life-time expected credit losses with effective interest rate on gross on amortised costs Accounting treatment for financial instruments already impaired when acquired Case Study #3: participants will assess the credit deterioration of a Greek bond throughout the crisis and its different stages Session 4 Financial Liabilities & Own Credit Financial liabilities at amortised cost or FVTPL Own credit deterioration reduces institutions liabilities Liability reduction due to rating downgrade to be now classified in OCI Case Study #4: participants will assess the impact on credit deterioration on institutions own bonds Session 5 Hedge Accounting Qualification for hedge accounting Different types of hedge accounting, same as IAS 39, except for time value of money and forward points in foreign exchange forward Cash flow hedge Fair value hedge Net investment hedge for foreign subsidiaries Accounting treatment for time value of money for options: a two-step process through OCI Accounting treatment for foreign currency forward points in OCI IFRS 9 hedge accounting more closely aligned to risk management policy Removal of hedge effectiveness criteria (80% to 125%) Extends eligibility of risk component to include non-financial items Permits aggregate exposure that includes a derivative to be eligible hedged item Group of items and a net position (e.g. assets & liabilities or forecast sales & purchases) hedged collectively as group Case Study #5: participants will classify a few hedging transactions in their relevant categories Case Study #6: participants will value an interest rate swap accounted for as a cash flow hedge Case Study #7: participants will review and assess different hedge scenarios including risk component hedging, aggregate exposures and net position

4 Course Summary International Financial Reporting Standard 9 ( IFRS 9 ) is the accounting standard for financial instruments, which defines the classification, measurements and impairment of financial instruments. It is designed to make annual reports more meaningful to investors as well as simplify how auditors implement the rules and introduce safeguards to limit credit losses. In July 2014, after several years of delay, the accounting regulators published the final text of IFRS 9. This combines revised versions of previously published sections with the first publication of the final and most controversial impairment section. IFRS 9 will become effective in Through a mix of lecture and case studies, the workshop will equip participants to achieve a detailed understanding of the latest IFRS 9 standard, both for financial assets, liabilities and derivatives, including: The classification and measurement of financial instruments; The new impairment methodology based on expected losses; The fair value of financial liabilities and deterioration of institutions own credit; The different types of hedge accounting and the recent IFRS changes. What Redcliffe s clients are saying about the course All very good Practical examples work well, very engaging facilitator The instructor made the examples relevant to corporate The course covered what was needed

5 09:30-17:00 London Standard Price: 625 +VAT Membership Price: VAT In-House Training Delivering this course in-house for a number of participants could be very cost effective. The venue and timing can be agreed to suit the client, as well as the selection of the trainer and the precise contents of the seminar. Tailored Learning All of our training courses can be tailored to suit your company s exact training needs. We will work closely with you to help develop a training programme with content that is unique for your organisation. Please us on enquiries@redcliffetraining.co.uk for more information E-Learning This course can also be presented as a bespoke e-learning programme created by you to fit your exact requirements.