IFRS 9 Financial Instruments

Course description

International Financial Reporting Standard 9 (“IFRS 9”) is the accounting standard replacing IAS 39 Standard for financial instruments and 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 became effective in 2018.

This practical, computer based, 1 day course conducted by an expert with over 20 years of experience from the sector will look at treatment and calculation of different financial ratios under IFRS 9. Through many case studies and practical examples you will explore the requirements for recognition and measurement, impairment, derecognition and hedge accounting.

Due to the nature of this program participants are required to bring laptops. We can provide one for additional fee.

What will you learn

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

You may be also interested in one of the following programmes: 

Register for any 2 public courses at the same time and save £100 + VAT (in total, not per course)


Main topics covered during this training

  • Introduction to IFRS 9 – Explanation, timeline, difference with IFRS 39
  • Financial Assets Classification & Measurement
  • Analysing Amortised Costs, Fair value through Profit & Loss (FVTPL) and Fair value through Other Comprehensive Income (FVTOCI)
  • Accounting treatment determined by (i) business model (ii) nature of cash flows
  • Decision tree for classification of financial instruments
  • Balance sheet and P&L calculation of a bond at FVTPL and FVTOCI
  • Financial Assets Impairments
  • Financial Liabilities & Own Credit
  • Hedge Accounting
  • Many case studies

Who should attend

  • FIG Analysts / Associates
  • Equity Research Professionals
  • Finance Team Members from Corporations and Banks
  • Bank Risk Managers
  • Analysts

IFRS 9 Financial Instruments - A 1 Day Training Course

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 overallvalue

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

  • 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

 

 

 

Trainer

Course Director is an experienced Corporate Finance professional with over 20 years’ experience in M&A and capital market transactions. He has successfully completed in excess of EUR 30 billion across multiple geographies (US, Europe, MENA).He began his career as a Credit Analyst at Banque Continentale in Luxembourg, before moving to the Investment Banking division at Citigroup (ex-Salomon Smith Barney) in London and New York where he worked on variety of M&A, LBO and debt offerings, mainly for financial services clients. He became Vice-President in the internal M&A department of Barclays Bank in London before moving on to a Directorship role at the Investment Banking division of Commercial International Bank (CIB), Egypt. Whilst there, he successfully completed several transactions including two sell-side M&A, one follow-on equity offering and a delisting. He worked extensively with leading sovereign wealth funds, private equity firms and prominent families in the Middle East.

Serge has an MBA from the Kellogg School of Management in Chicago and a Bachelor of Science from the International Management Institute of Paris.

 

FAQ

We offer banking and finance courses as well as soft skills and business management training. You can either attend an open public course in London or Dubai or arrange customised in-house training to be delivered in any of your offices worldwide.

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Our in-house courses can be delivered anywhere in the world. We work with over 25 trainers worldwide. Contact us do discuss your requirements. Check our list of available programmes.

Our courses are run in central locations from 9 a.m until 5-5.30 p.m. There are 2 coffee breaks and a lunch break. Lunch is always provided in the venue.

Dress code is smart casual.

All our programmes are taught by senior specialists who have spent many years in their respective sectors, working as senior managers and head of departments, so they understand very well the market and the challenges you are facing.

The experience of our trainers allows us to create very practical programmes, focused on current market trends and challenges. You can be sure that you will gain the knowledge which can be instantly applied in your workplace after the course. You will be analysing real life case studies, take part in group exercises and discussions as well as role plays, whenever applicable.

We want our courses to be as practical and interactive as possible so we limit the number of participants in order to optimise your time with the trainer and allow you to ask questions which are important for you.

In order to understand your requirements and expectations, we will send you a pre-course questionnaire.

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If you are a full time student or unemployed, we offer a 25% discount of the full price of the training. Student ID or unemployment status confirmation is required to claim this discount.

If you attend one of our courses you will be entitled to a special discount for a year after the last course you attend with us. Also, if you have attended and recommended us to a friend, both you and your friend will receive a special discount. You will receive more information about it after you attend the course.

See our Customer Loyalty Discounts page for more details.

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You can, however, claim the VAT back by contacting UK tax office - HMRC, and filling the relevant form, as long as you comply with the following rules:

For Delegates coming from the EU countries

If you represent a registered business in another EU country, you can use the Refund Scheme to reclaim VAT you pay in the UK as long as all of the following apply:

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You can find some more information here. In order to claim the VAT you have to fill Form 65.

For the Delegates from Non EU countries

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Alternatively, for cancellations requests received more than 20 working days before the course date we will offer a refund less an administration fee of 10% of the course price.

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Your place on a course is not guaranteed until we receive the payment. All payments must be made in full before the course date.

All our trainers have been working for many years in their respective sectors before they begun to teach so they bring a wealth of practical experience to the classroom.

Most of them used to work for 15 or more years in the financial sector and corporate world, and were holding positions of Directors, VP and Senior Managers. Some of them have published books and have written articles for specialised magazines and newspapers including FT, The Independent, The Times etc. You can find detailed biography of each trainer on the page of the course you want to register for.

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18 May 2020, London

Register by 31 Mar to save £200

Early bird price £795 + VAT

Regular price £995 + VAT


10% discount for 3 people


This topic can be arranged on in-house basis. If you have a group of 4 or more we can customise it and deliver in any location worldwide. Contact us to discuss your requirements


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