ifrs 7 presenting financial instruments

IFRS 7 FINANCIAL INSTRUMENTS DISCLOSURES

COACHING CLASSES FOR COMMERCE STUDENTS:INTER COMMERCE1ST YEAR 2ND YEARACCOUNTINGBUSINESS MATHS STATISTICS

ECONOMICS BANKINGB.COM classesPART 1 ACCOUNTING, ECONOMICS & STATISTICS .PART 2 ADVANCED ACCOUNTINGO LEVELSACCOUNTS, ECONOMICS, BUSINESS STUDIES, PAKISTAN STUDIES & URDU.ICMAP STAGE 1,2,3,4PIPFAICAP MODULE B & DCAT T1-T8ACCA F1,F2,F3,F5,F8,P1,P7MA-ECONOMICS100 % RESULT IN 2011-2012KHALID AZIZ0322-3385752R1173, ALNOOR SOCIETY, BLOCK 19, POWER HOUSE, F.B.AREA, KARACHI.

JOIN SIR KHALID EXPERIENCE OF OVER 12 YEARS COACHING CLASSES FOR O/As/A LEVELs ACCOUNTS, COMMERCE,BUSINESS

STUDIES, ECONOMICS,URDU & PAK.STUDIES.

CONCEPTUAL LEARNING COMPLETE PAST PAPERS CONTACT NOW: 0322-3385752 KARACHI http://o-levels-pk.blogspot.com/

http://o-levels-pk.blogspot.com/

PIPFA PIPFA STUDENTS INTERMEDIATE FINANCIAL ACCOUNTING PERFORMANCE MEASUREMENT COMPLETION OF SYLLABUS IN 3

MONTH JOIN KHALID AZIZ 0322*3385752 R1173-ALNOOR SOCIETY BLOCK 19

F.B.AREA-KARACHI.

ICAP ICAP STUDENTS

MODULE A QT

MODULE B FINANCIAL ACCOUNTING BUSINESS ECONOMICS

MODULE D COST ACCOUNTING

COMPLETION OF SYLLABUS IN 3 MONTHS

JOIN KHALID AZIZ

0322*3385752

R1173, ALNOOR SOCIETY, BLOCK 19. F.B.AREA, KARACHI.

MA ECONOMICSEXTERNAL

PREVIOUS MICRO ECONOMICS & STATISTICS FINAL MACRO ECONOMICS

O/A LEVELS ACCOUNTING, ECONOMICS, BUSINESS

STUDIES, URDU & PAK STUDIES

INTER COMMERCE

1ST YEAR ACCOUNTING, BUSINESS MATHS & ECONOMICS.

2ND YEAR ACCOUNTING & STATISTICS

B.COM REGULAR & PRIVATE

PART 1 ACCOUNTING, STATISTICS & ECONOMICS.

PART 2 ADVANCED & COST ACCOUNTING, BUSINESS LAW, AUDITING & TAX.

Introduction• IFRS 7 sets out disclosures of financial

instruments• The presentation, recognition and

measurement of financial instruments are the subjects of

• IAS 32 Financial Instruments: Presentation • IAS 39 Financial Instruments: Recognition

and Measurement • IFRS 9 Financial Instruments (being developed

in phases) is intended to ultimately replace IAS 39.

12© IFRS Foundation | 30 Cannon Street | London EC4M 6XH | UK. www.ifrs.org

Disclosure principlesInformation that enables users to evaluate the

significance of financial instruments for the entity’s financial position and financial

performance.• Information (qualitative and quantitative) that

enables users to evaluate• the nature and extent of risks arising from

financial instruments to which the entity is exposed at the end of the reporting period.

• including information about how the entity manages its exposure to those financial risks.


Disclosure requirements• Qualitative information about exposure to risks

arising from financial instruments. • The disclosures describe management’s

objectives, policies and processes for managing those risks


Disclosure requirements continued

• Quantitative information about exposure to risks arising from financial instruments, including specified minimum disclosures about

• credit risk, • liquidity risk and • market risk.

• These disclosures provide information about the extent to which the entity is exposed to risk, based on information provided internally to the entity’s key management personnel.


Comparison to the IFRS for SMEs

The IFRS for SMEs requires less detailed disclosure of financial instruments.


Judgements and estimates• Qualitative and quantitative information to

evaluate the nature and extent of the entity’s exposure to and management of risks arising from financial instruments, including:

• amounts that best represent maximum exposure to credit risk.

• sensitivity analysis for each type of market risk showing how profit or loss and equity would have been affected by changes in relevant variables that are reasonably possible.


Judgements and estimates continued

• Fair value information is required to be provided for all financial assets and liabilities (with limited exceptions) irrespective of whether they are carried at FV.


International Financial Reporting Standards

The views expressed in this presentation are those of the presenter, not necessarily those of the IASB or IFRS Foundation

Offsetting Financial Assets and

Financial Liabilities

© IFRS Foundation | 30 Cannon Street | London EC4M 6XH | UK. www.ifrs.org

Disclosure requirements• Respond to comments:

• preparers: Cost-benefit – scope, class vs. counterparty, existing disclosure requirements

• investors: Need for information about gross and net exposures

• Provide information about exposures in normal course and in times of stress

• Don’t reconcile IFRSs and US GAAP but allow entities to be compared on a like basis


Disclosure requirements continued

• Proposed disclosure:

21

Gross amountsbefore

offsetting

(A)

Gross amountsset off

(B)

Net amountspresentedin balance

sheet (C)

Other amountsin scope butnot set off in

balance sheet (D)

Net amounts

(E) [same forall preparers]

[depends onoffsetting model]



[same forall preparers]


Example:Disclosure

a. b. c. d. e.

Financial assets Gross carrying amounts (before

offsetting)

Gross amounts

offset

Net amount presented in statement of financial

position(a-b)

Amounts available to be offset (but not set off in stmt of financial

position)(ie in bankruptcy or default)

Net exposure (c-d)

Category Financial instruments

Cash collateral

Derivatives 100 (80) 20 (10) 10 -

22

Assume an entity has a recognised derivative asset with a fair value of 100 and a recognised derivative liability with a fair value of 80 that meet the criteria for offsetting. The entity has another derivative liability with a fair value of 10 and cash collateral of 20 that do not meet the criteria for offsetting. The financial assets would be disclosed as follows:


Example:Disclosure continued

23

Same example Assume an entity has a recognised derivative asset with a fair value of 100 and a recognised derivative liability with a fair value of 80 that meet the criteria for offsetting. The entity has another derivative liability with a fair value of 10 and cash collateral of 20 that do not meet the criteria for offsetting. The financial liabilities would be disclosed as follows:

a. b. c. d. e.

Financial liabilities

Gross carrying amounts (before

offsetting)

Gross amounts

offset

Net amount presented in statement of financial

position(a-b)

Amounts available to be offset (but not set off in stmt of financial

position)(ie in bankruptcy or default)

Net exposure (c-d)

Category Financial instruments

Cash collateral

Derivatives 90 (80) 10 - 10 -


Application guidance to IAS 32 Comments received highlighted inconsistencies in

the application of the offsetting requirements in IAS 32

In December 2011, the IASB separately clarified the application of the offsetting criteria in IAS 32: Legally enforceable right of set-off:

The normal course of business; The event of default; and The event of insolvency or bankruptcy

Some gross settlement systems are considered equivalent to net settlement if they eliminate or result in insignificant credit and liquidity risk and process receivables and payables in a single settlement process or cycle.


25

Questions or comments?

Expressions of individual views by members of the IASB and its staff are encouraged. The views expressed in this presentation are those of the presenter.

Official positions of the IASB on accounting matters are determined only after extensive due process and deliberation.


26

The requirements are set out in International Financial Reporting Standards (IFRSs), as issued by the IASB at 1 January 2012 with an effective date after 1 January 2012 but not the IFRSs they will replace.The IFRS Foundation, the authors, the presenters and the publishers do not accept responsibility for loss caused to any person who acts or refrains from acting in reliance on the material in this PowerPoint presentation, whether such loss is caused by negligence or otherwise.

26


ifrs 7 presenting financial instruments

Business