IFRS 9 | Wolters Kluwer Financial Services OneSumX
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  • IFRS 9 Financial Instruments (replacement of IAS 39)

    The International Accounting Standards Board (IASB) IFRS 9 project, which replaces the IAS 39 standard, addresses classification and measurement, impairment methodology and hedge accounting. The implementation of the new full IFRS 9 standard will have a considerable impact not only on IT systems, but also on people, policies and procedures.

    Our comprehensive and modular OneSumX IFRS 9 solution, provides the financial industry with a solid framework to capture and store all relevant contractual information, manage events and transactions, IFRS calculations, accounting generation and processing up to the delivery of the disclosures. OneSumX IFRS 9 supports:

    Classification and measurement

    • A ‘cash-flow characteristic’ test to assess eligibility to measurement at amortized cost.
    • Pre-defined IFRS 9 classification business rules
    • An amortized cost-calculation engine with built-in support for debt restructuring, below-market loans and wide variety of product lifetime events
    • Fair value measurement techniques
    • Support for storing and reporting on the Fair Value Hierarchies (IFRS 13)
    • A complete set of IFRS 9 compliant accounting schemes

    Impairment and the expected credit losses model

    • Develop and build an expected credit loss model that needs to be run in multiple scenarios
    • Implement PD/LGD and EAD term structures based on best practices methodologies
    • Ability to implement from a tactical towards a strategic solution for IFRS 9 compliance
    • Expected Credit Loss calculators which can work with expert judgment or macroeconomic scenarios
    • Stage assessment based on best practice indicators
    • Historical tracking of movements between any of the three stages on a portfolio and individual level
    • Accounting schemes that include the logic for the expected credit losses over the full instrument’s lifecycle
    • Support for calculation and subsequent accounting processing of credit-adjusted effective interest rate (EIR), amortized cost and effective interest for purchased or originated credit-impaired instruments

    Hedge accounting

    The hedge accounting element of the regulation can be addressed using either IAS 39 or IFRS 9 principles, and our flexible solution enables both methods. If the IAS 39 option is chosen the following features are available:

    • Hedge designation
    • Hedged risk calculations (both delta and full)
    • Hedge effectiveness calculation
    • Effectiveness testing
    • Accounting adjustment calculators
    • Scope: Micro, Portfolio and Macro hedging

    If the adoption of IFRS 9 is chosen, principles for portfolio hedging are excluded and the software introduces the rebalancing concept on top of effectiveness calculation as an addition towards the hedge accounting module. The risk aspect which is of course closely related can be managed via dynamic hedging within the same application.

    Disclosure requirements

    • OneSumX IFRS 9 support the IFRS regulatory disclosures for many local supervisors across the globe, such as Europe’s FINREP.
    • By combining the lifecycle information on each individual financial instrument with a transparent and auditable contract level IFRS sub ledger and powerful reporting tools, positions us for full compliance with IFRS 9 and other IFRS disclosures. The solution offers full transparency and traceability that fully satisfies internal and external audit needs.
    IFRS 9 Solution Architecture

    Click image above for larger version

    More reading

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