IFRS 9 – Impairment of financial instruments

Content of the training

• Scope of impairment requirements
• General overview of the requirements – depiction of 3 stages 
• Criterion of significant increase in credit risk + detailed description of assessment principles, individual vs collective assessment and practical expedients
• Requirements for measurement of 12-month and lifetime expected losses + explanation of models commonly used in practice 
• Application to off-balance sheet exposures – loan commitments and financial guarantees
• Specific requirements for revolving credit facilities
• Forward looking adjustments of expected credit losses
• Credit impaired financial assets - Stage 3
• Modifications of cash flows (restructurings)
• Application to financial assets measured at fair value through OCI 
• Accounting for reclassifications and related changes in impairment 
• Exceptions from the general model – recognition of lifetime expected losses from inception for specific types of assets, 
• Special requirements for purchased or originated credit impaired (POCI) assets and interactions with derecognition requirements
• Requirements for presentation in the financial statements
• Detailed requirements for disclosures of expected credit losses including disclosure examples
• Outcomes of discussions by ITG (Impairment Transition Resource Group) organised by the IASB
• Practical application issues – calculation of PDs, LGDs, EADs, discount factors, adjustments of values used for regulatory purposes, derivation of long-term PDs based on short-term period observations + calculation examples

Discussion of implementation issues

After completing the training the participants will understand 

• assessment of significant increases of credit risk which distinguishes whether the impairment is measured based on 12-month or lifetime expected credit losses
• measurement of the expected credit losses including models commonly used in practice
• special areas of impairment requirements such as POCI, modification of financial assets including leeway to affect the extent of POCI in the balance sheet – specific rules applicable to revolving facilities 
• disclosures of credit risk for financial instruments based on practical examples

Target audience

• At banks and other financial institutions mainly employees at following departments: accounting, reporting, risk management, treasury, ALM, controlling, internal audit, financial analyses of IFRS statements of customers 
• At non-financial companies mainly employees at following departments: accounting, reporting, risk management, controlling, internal audit   
• Audit firms 
• Supervisors and enforcers in the area of financial institutions accounting