IFRS 7 Financial Instruments: Disclosures

IFRS AT A GLANCE IFRS 7 Financial Instruments: Disclosures

As at 1 July 2015

IFRS 7 Financial Instruments: Disclosures Effective Date Periods beginning on or after 1 January 2007

DISCLOSURE REQUIREMENTS: SIGNIFICANCE OF FINANCIAL INSTRUMENTS DISCLOSURE REQUIREMENTS: NATURE AND EXTENT OF RISKS ARISING FROM FINANCIAL IN TERMS OF THE FINANCIAL POSITION AND PERFORMANCE INSTRUMENTS AND HOW THE RISKS ARE MANAGED

Qualitative disclosure Quantitative disclosure STATEMENT OF FINANCIAL POSITION OTHER  Exposure to risk and how it arises  Summary of quantitative data about exposure to risk based on  Objectives, policies and processes for information given to key management  Total carrying value of each category of financial assets Accounting policies: managing risk and method used to measure  Concentrations of risks. and liabilities on face of the statement of financial  All relevant accounting risk. position or in the notes policies. Include  Information on fair value of loans and receivables measurement basis.  Financial liabilities designated as at fair value through SPECIFIC QUANTITATIVE DISCLOSURE REQUIREMENTS profit and loss Hedge accounting: Specific Financial quantitative assets reclassified disclosure requirements:  Description of hedge,  Financial assets that do not qualify for derecognition description and fair value of LIQUIDITY RISK CREDIT RISK MARKET RISK  Details of financial assets pledged as collateral & hedged instrument and type collateral held of risk hedged Definition: Definition: Definition:  Reconciliation of allowance account for credit losses.  Details of cash flow hedges, The risk that an entity will encounter The risk that one party to a The risk that the fair value or future  Compound financial instruments with embedded fair value hedges and hedge difficulty in meeting obligations financial instrument will cause cash flows of a financial instrument will derivatives of net investment in foreign associated with financial liabilities. a financial loss for the other fluctuate due to changes in market  Details of defaults and breaches of loans payable. operations. party by failing to discharge an prices. Market risk comprises three  obligation. types of risk: currency risk, interest rate Fair value:  Maturity analysis for financial risk and other price risk. STATEMENT OF COMPREHENSIVE INCOME  Fair value for each class of liabilities that shows the financial asset and liability remaining contractual maturities –  Gain or loss for each category of financial assets and liabilities  Disclose method and Appendix B10A – B11F  Maximum exposure to credit  A sensitivity analysis (including in the statement of comprehensive income or in the notes relevant assumptions to  Time bands and increment are risk without taking into methods and assumptions used) for  Total interest income and interest expense (effective interest calculate fair value based on the entities’ judgement account collateral each type of market risk exposed, method)  Disclose if fair value cannot  How liquidity risk is managed.  Collateral held as security showing impact on profit or loss and  Fee income and expense be determined. and other credit equity  Interest on impaired financial assets enhancements or  Amount of impairment loss for each financial asset.  Information of financial  If a sensitivity analysis is prepared by assets that are either past an entity, showing interdependencies due (when a counterparty between risk variables and it is used SCOPE FAIR VALUE (FV) HIERARCHY has failed to make a to manage financial risks, it can be payment when contractually used in place of the above sensitivity analysis. IFRS 7 applies to all recognised and All financial instruments measured at fair value must be classified into the levels below (that due) or impaired unrecognised financial instruments (including reflect how fair value has been determined):  Information about collateral contracts to buy or sell non-financial assets) and other credit  Level 1: Quoted prices, in active markets except: enhancements obtained.  Level 2: Level 1 quoted prices are not available but fair value is based on observable market  Interests in subsidiaries, associates or joint data ventures, where IAS 27/28 or IFRS 10/11  Level 3: Inputs that are not based on observable market data. TRANSFER OF FINACIAL ASSETS permit accounting in accordance with IAS 39/IFRS 9 A financial Instrument will be categorised based on the lowest level of any one of the inputs  Assets and liabilities resulting from IAS 19 Information for transferred assets that are and that are not derecognised used for its valuation. in their entirety:  Insurance contracts in accordance with IFRS 4 (excluding embedded derivatives in The following disclosures are also required:  Information to understand the relationship between financial assets and these contracts if IAS 39/IFRS 9 require  Significant transfers of financial instruments between each category – and reasons why associated liabilities that are not derecognised in their entirety separate accounting)  For level 3, a reconciliation between opening and closing balances, incorporating;  Information to evaluate the nature and risk associated with the entities  Financial instruments, contracts and gains/losses, purchases/sales/settlements, transfers continuing involvement in derecognised assets (IFRS 7.42A-G). obligations under IFRS 2, except contracts  Amount of gains/losses and where they are included in profit and loss within the scope of IAS 39/IFRS 9  For level 3, if changing one or more inputs to a reasonably possible alternative would result  Puttable instruments (IAS 32.16A-D). in a significant change in FV, disclose this fact.

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