IFRS 7

Question 1

What is the IFRS 7 objective ?

Answer 1

Disclose significance of financial instruments position + performance. I.e.

• Nature + extent of risks
• During + at end of period
• How risks are managed

Question 2

What is the scope of IFRS 7 ?

Answer 2

All financial instruments - EXCEPT
IFRS 2 share based pmts
IFRS 10, 27, 28 Subs, assoc, JVS
IFRS 17 ins contracts
- included however,
- separated embedded derivatives
- separated investment components
- opted valuation under IFRS 9
IAS 19 benefit plans
Puttable own equity instr under certain conditions

Question 3

What are IFRS 7 disclosure requirments for fin pos ?

Answer 3

1) Carrying amounts of your financial instruments by their categories
(FVTPL/OCI, AmortCost, mandatory/designated/held for trading)
2) Financial assets or financial liabilities measured at FVTPL
3) Investments in equity instruments designated at FVOCI
4) Reclassifications
5) Offsetting financial assets and financial liabilities
6) Collaterals
8) Allowance account for credit losses
9) Compound financial instruments with multiple embedded derivatives
10) Default and breaches

Question 4

What are IFRS 7 disclosure requirments for Stmt Compr income ?

Answer 4

1) Net gain+loss by instrument category
2) Total interest revenue & expense
3) Fee income & expense

from FVTOCI/Amort Cost instrum excl eff interest

+ from mgmt of invest/retire funds

4) Impairment losses
5) Derecogntion Amort Cost fin assets : gain+loss + derecog reason

Question 5

What are IFRS 7 OTHER disclosure requirments (not BS or PL) ?

Answer 5

1) Acctg policies (trade/settlm date, designations, etc)
2) Hedge accounting (strategy, objective, amt, timing, uncertainty, effect)
3) FairValues by class
- how they were determined
- explain not reliably measurable
4) Transfer of fin assets (not recogn entirely/cont involve)
6) Initial application of IFRS 9

Question 6

What are IFRS 7 disclosure requirments for nature + risks ?

Answer 6

Risks types :
Credit, Liquidity, Market (Interest, Currency, Other Price), Concentration risks
Qualitative :
- Type of risk + how they arise
- Objectives, policies to manage, methods to measure
- Changes
Quantitative :
- Credit risks :
Practices, inputs, assumptions, techniques, definitions
Expected credit loss
Collaterals + enhancements
Exposure
- Liquitidy risks :
Maturity Analysis
- Market risks
Sensitivity analysis
(i) basic - PL/equity change OR
(ii) value-at-risk - interdependencies