PFRS 7
FINANCIAL INSTRUMENTS:
DISCLOSURES
- KIRK ARGOTA
- HANNA MARY CUSAP
- MICHELLE LALAINE UY
SCOPE
Everyone who has financial instruments, no
exception as to type of entity
Except (as to type of FI):
subsidiaries, associates, joint-ventures (PFRS 10, PAS
27, PAS 28), insurance contracts (PFRS 4), share-based
payments (PFRS 2), employee benefit plans (PAS 19)
IFRS 7 requires entities to provide disclosures that
enable users to evaluate:
1. The significance of financial instruments for the
entity’s financial position and performance
2. The nature and extent of risks arising from the
financial instruments to which the entity is exposed
and how the entity manages them
1. SIGNIFICANCE OF FINANCIAL INSTRUMENTS
STATEMENT OF FINANCIAL POSITION
STATEMENT OF FINANCIAL PERFORMANCE
OTHER DISCLOSURES
SIGNIFICANCE OF FINANCIAL INSTRUMENTS
STATEMENT OF FINANCIAL POSITION
Categories of Financial Assets and Financial Liabilities
Financial Assets and Financial Liabilities at FV P/L
Reclassifications
Collaterals
Allowance for credit losses
Defaults, breaches of loans payable
Compound Financial Instruments with embedded derivatives
SIGNIFICANCE OF FINANCIAL INSTRUMENTS
STATEMENT OF COMPREHENSIVE INCOME
Gains/losses for each category of FA/FL
Interest income and interest expense
Fee income and expense
Impairment loss
SIGNIFICANCE OF FINANCIAL INSTRUMENTS
OTHER DISCLOSURES
ACCOUNTING POLICIES: HEDGE ACCOUNTING:
Criteria for FV P/L designation Risk management strategy
Trade date vs. Settlement date Future cash flows (amount,
timing, uncertainty)
FAIR VALUES: Effect of hedge accounting on FS
Fair values for each class of FA, FL
How FV was deterrmined
If FV is not reliably measured -
describe
2. NATURE AND EXTENT OF RISKS
QUALITATIVE DISCLOSURES
QUANTITATIVE DISCLOSURES
CONCENTRATIONS OF RISKS
2. NATURE AND EXTENT OF RISKS
QUALITATIVE DISCLOSURES
The exposures to risk and how they arise
Management’s objectives, policies, and processes for
managing the risk and the methods used to measure the
risk
Changes from previous period
2. NATURE AND EXTENT OF RISKS
QUANTITATIVE DISCLOSURES
Summary quantitative data about exposure to each risk
at the reporting date
Disclosures about credit risk, liquidity risk, and
market risk and how these risks are managed
2. NATURE AND EXTENT OF RISKS
QUANTITATIVE DISCLOSURES
CREDIT RISK
Risk of financial loss if the counterparty fails to repay
Disclosures: Maximum exposure, collateral, credit quality
of FA, analytical disclosure for past due and impaired FA
LIQUIDITY RISK
Risk of difficulty in meeting obligations related to FL
Disclosures: maturity analysis of FL, description of
approach to risk management
2. NATURE AND EXTENT OF RISKS
QUANTITATIVE DISCLOSURES
MARKET RISK
The risk that FV or future cash flows of a FI will fluctuate
because of changes in market prices due to:
foreign currency risk - risk associated with fluctuations in foreign
exchange rates
interest rate risk - risk associated with changes in market interest
rates
other price risk - risk associated with fluctuations in market prices
other than those arising from interest rate risk or currency risk
Disclosures: sensitivity analysis
END OF PRESENTATION...
