Example of disclosure under IFRS 7: Past due or impaired financial assets

Let's take a look at what disclosures are required under IFRS 7. The IFRS 7 disclosure requirements for financial instruments are relevant for any company, even if it is a financial institution. Consider the main provisions of this standard.

Imagine a situation typical of an audit of a financial institution. You are checking the accounts of a medium-sized consumer lending company.

The company requires IFRS financial statements due to the large number of loans received from foreign banks. Typically, these banks require large debtors to submit annual financial statements.

On a cursory check of the notes to the financial statements, at first glance, everything looks clean and beautiful - the numbers add up and everything is balanced.

But a closer look reveals that the company has not provided any notes on financial instruments ( loans received and granted), excluding balance sheet amounts.

Part of the reason for this problem is that IFRS 9 Financial Instruments is too complex and cumbersome, and so the standards drafters decided to set the disclosure requirements in a completely different standard - IFRS 7 Financial Instruments: Disclosures.

In fact, this standard is a continuation of IFRS 9.

Let's take a look at what disclosures are required under IFRS 7. These requirements are relevant for companies that are NOT financial institutions, as this standard applies to any company that holds financial instruments.

With no exceptions.

Thus, even if your company only has trade receivables and credit payables, you must ensure that appropriate disclosures about financial instruments are made in the financial statements.

Scope of IFRS 7 Financial Instruments: Disclosures.

IFRS 7 prescribes disclosure requirements for all legal entities that have financial instruments on their balance sheets.

But while IAS 30 only applies to banks and financial institutions, IFRS 7 applies to all companies.

Therefore, even if you work for a trading company and you have some loans and trade receivables, you should be familiar with IFRS 7 to know what to include in your notes to the financial statements.

There are several types of instruments that are not covered by IFRS 7 and you must disclose information about them in accordance with other standards. These are tools such as:

• Shares in subsidiaries, joint ventures and associates (IAS 28);
• insurance contracts;
• Compound instruments in accordance with IAS 32 (this excludes your own equity instruments, not equity instruments of other companies that are your financial assets).

What disclosures are required under IFRS 7?

IFRS 7 requires specific disclosures in two main areas:

• Materiality of financial instruments and
• The nature and extent of the risks of financial instruments, and how these risks are managed.

Materiality of financial instruments.

These disclosures are necessary to understand whether financial instruments are significant to the entity's financial position and performance.

They are divided into several subgroups in accordance with the main financial statements. We list some of them:

1. Disclosure of the statement of financial position:

• The carrying amount of financial instruments in the categories listed in the standard.
• Financial assets or financial liabilities at fair value through profit or loss (FVTPL).
• Investments in equity instruments measured at fair value through other comprehensive income (FVOCI).
• Reclassifications.
• Offsetting financial assets and financial liabilities.
• Securing obligations.
• Credit loss allowance account.
• Compound financial instruments with embedded derivatives.
• Default of financial instruments and breach of obligations.

2. Disclosure of information in the statement of comprehensive income. It is necessary to disclose data on income, expenses, profits or losses, mainly under the following items:

• Net gains or losses for each category of financial instruments.
• Total amounts of interest income and expenses.
• Income and expenses in the form of interest commissions and fees.
• Analysis of gain or loss on derecognition of financial assets at amortized cost.

3. Other disclosures.

• Hedge accounting disclosures (risk management strategies, effect of hedge accounting, etc.)
• Fair value (its definition; fair value of financial assets and liabilities; clarification of situations when fair value cannot be determined).

You must disclose most of the information above, disaggregated by at least the categories of financial instruments.

The nature and level of risks of financial instruments.

This part of the disclosures is very time consuming, as it requires additional analysis and work, especially for the disclosure of market risk.

IFRS 7 requires qualitative and quantitative disclosure three main risks:

• Credit risk ("market risk");
• Liquidity risk;
• Market risk ("credit risk").

For each type of risk, you should do:

Qualitative disclosures ("qualitative disclosures") :

Here you usually describe how the company is exposed to risks, how risks arise, and how the company manages those risks.

Qualitative disclosures ("qualitative disclosures
disclosure disclosures") :

You need to provide a summary of quantitative data (numbers) about risk levels.

There is a lot of detail here and IFRS 7 requires specific quantitative disclosures for each type of risk (see example below).

You must also provide information on risk concentrations.

Disclosure of credit risk.

Credit risk associated with your financial assets, and, simply put, it is the risk that you will incur financial losses due to a counterparty defaulting on its obligations.

If you have trade receivables or make loans, then you are exposed to credit risk and you should focus on this part of the standard.

You must disclose:

• Credit risk management methods.
• Information about amounts associated with expected credit losses.
• exposure to credit risk.
• Collateral and other credit enhancements that reduce exposure to credit risk.

Here is one example of what a quantitative credit risk disclosure for trade receivables might look like:

	Maturity analysis of trade receivables
Wholesale clients
Retail clients
Expected credit loss ratio
Estimated book value of default
ECL for the life of the receivable

Disclosure of liquidity risk.

Liquidity risk associated with your financial obligations and is sort of the "opposite" of credit risk.

it the risk that your company will not be able to meet its financial obligations with cash or other financial assets.

You must disclose:

• maturity analysis of financial liabilities (separately for non-derivative and derivative financial risks);
• how you manage liquidity risk.

Below is an illustration of quantitative disclosure for liquidity risk:

	Maturities of financial liabilities
Bank loans
Accounts payable
Derivative financial liabilities
Other financial liabilities

Disclosure of market risk.

Market risk- this is the risk that both the fair value and the future cash flows of your financial assets or financial liabilities will fluctuate due to changes in market prices.

Market risk has several components related to what causes a change in future cash flows or fair value:

• Currency risk ("currency risk"). Foreign exchange risk causes fluctuations in cash flows or fair value;
• The risk of changes in interest rates ("interest rate risk"). Fluctuations in cash flows are caused by changes in interest rates;
• Other price risk ("other price risk"). Fluctuations are caused by changes in other market prices such as commodity prices, stock prices, etc.

Disclosing information about market risk is quite complex and requires some effort because sensitivity analysis needs to be done.

There are two types of sensitivity analysis and you can choose the one that best suits your situation:

• "Basic" sensitivity analysis. Here it is necessary to model changes in a certain variable (interest rate, exchange rate, etc.) and show how these changes will affect profit or loss and capital.
• risk sum analysis. Here it is necessary to analyze interdependencies between variables, for example, between interest rates and exchange rates.

Other disclosures.

With the exception of two large groups of information disclosure (significance and nature of the risk), additional information is also required to be disclosed:

• Information about the transfer of financial assets and
• Information required on initial application of IFRS 9.

How to present disclosure?

As can be seen from the above provisions, IFRS 7 requires a significant amount of information to be presented.

If you want disclosures to be useful to reporting users, consider the following:

1. Multiple disclosures are required according to the classes of financial instruments(for example, disclosure of credit risk or disclosure of liquidity risk).

The classes are not the same as the categories of financial instruments, and here you should group your financial instruments into classes according to your opinion of what is best for reporting users. Also, don't use the same classes for different risks.

2. You may combine disclosures. Thus, one disclosure may satisfy several requirements.

3. Find the right balance between level of detail and materiality.

Make sure you include all relevant information, but omit excessive information about details that are not essential. Otherwise, users will be confused and the disclosure will be useless.

About the disclosure of information about risks, you can.

Among all the commercial reporting standards issued by the IFRS Council, which are mandatory for companies to use in today's economic conditions, IFRS 7 takes a special place. This standard could be called generalizing, since its provisions operate in direct connection with the regulations of other standards. This document, concerning the disclosure of information about the financial instruments of the company, is one of the most common standards due to the fact that financial instruments are present in the accounting of any company in one form or another.

This set of aggregated recommendations for commercial companies was developed by the International IASB and put into practice by the ministries of finance of various countries in order to ensure a unified procedure for working with such data in business reporting, regardless of its industry specifics.

The key objective of IFRS 7 considered in this article is to establish for firms a single list of requirements for displaying information in reporting that will most fully reflect the answers to the following questions by type of its financial instruments:

• What tools are at the disposal of the company?
• How do these tools affect the economic position and results of the business unit?
• What risks does the firm face in connection with the presence of these instruments?
• The size of the cumulative mathematical assessment of the size and nature of risks?

IFRS 7 complements the recognition techniques and principles that are covered in other financial reporting standards. It is extremely important to clarify right away that the application of this standard in isolation from the applied specific regulations is almost impossible, since individual paragraphs of the manual contain references to sections of other standards.

The standard under consideration is mandatory for application by any organizations in relation to all types of corporate financial instruments, with the exception of:

• Any interests in subsidiaries, JVs or associates;
• Equity and debt instruments related to employee benefit programs;
• Contracts of corporate liability insurance;
• Financial instruments that are related to share-based transactions.

This Standard applies to recognized/unrecognized corporate instruments, including all groups of financial assets and liabilities. Where information is required to be segmented into classes of instruments, companies are required to evaluate and group the data into classes that reflect the characteristics of that type of instrument. The company must reflect the information in such a way that users of the financial statements can relate the information to the data in the statement of financial position of the enterprise.

The main task of reporters is to disclose information in such a volume and in such a way that users can assess the impact of each group on the economic condition of the company. For example, the statement of financial position should clearly illustrate the carrying amounts of items in each group: assets at fair value through profit/loss, investments, loans and receivables, and other liabilities of a financial nature.

Under the rules of IFRS 7, an entity must disclose data that will enable users of its financial statements to analyze the impact of netting arrangements. This refers to the rights of set-off of recognized assets and financial liabilities of a corporate nature. It is recommended to include a description of the rationale for offsetting such assets/liabilities that are subject to enforceable master netting agreements.

Under IFRS 7, an entity must disclose the characteristics, description, timing and carrying amount of assets that have been pledged as collateral for liabilities. If the firm itself is the holder of the collateral and it is free from restrictions (sales/transfers), then it is recommended that it additionally disclose the fair value of the collateral, the terms and conditions associated with this transaction.

Companies are required to disclose in their financial statements prepared in accordance with IFRS 7 information on borrowings, in terms of indicating any defaults in the period, the carrying amounts of borrowings, restructurings, and other material information.

The statement of comprehensive income prepared in accordance with the rules and requirements of IFRS 7 must contain information on the amount of net profit and loss, the amount of total interest income and the amount of impairment loss for each group of assets.

If an entity uses hedging instruments, it is required to separately disclose descriptions of hedging types by area, characterize the financial instruments used as hedging instruments, their value, and describe the hedged risks.

IFRS 7 also requires an entity to disclose in its financial statements the nature and extent of the risks identified by the entity at the end of the period. Mainly for users of reporting, not only the properties of risks can be useful, but also the organizational techniques that the company uses to manage these risks. First of all, these recommendations relate to credit, market and liquidity risk. However, depending on the financial specifics of the company itself, other risks that are of greater importance to a particular company may be considered.

Companies are also required to disclose information on the transferred assets in terms of the relationship between the transferred assets and the resulting liabilities on them, the nature of the company's participation in the assets for which derecognition is derecognised, and the risks associated with such processes.

For a deeper and more comprehensive understanding of the above provisions of the company's financial statements, it is recommended to present the key provisions of the company's accounting policy, the methodology for calculating indicators, the basis for the formation of estimates, as well as other relevant information regarding the company's financial accounting system.

Based on the review of IFRS 7, it can be concluded that its application is an extremely complex and multifaceted topic. First of all, the difficulties are due to the fact that this standard cannot be applied individually, and its scope of responsibility covers almost all major corporate financial reporting standards. In addition, the list of issues covered is very large and each individual type requires specific knowledge and professionalism of the reporting team.

The application of the IFRS 7 standard in practice requires not just studying the manual to it, but rather analyzing the specifics of all interrelated regulations so that the resulting reporting information and estimates solve the tasks assigned to them. Financial instruments as a class of accounting objects is a very large grouping, therefore the subject requirements for accounting and reporting data are contained in separate IFRS guidelines for each type of instrument, and the recommendations of the IFRS 7 standard are rather aggregated guidelines that should be applied based on the requirements of the applied guidance on this topic .

Target

1 The purpose of this IFRS 7 is to establish requirements for entities to present in their financial statements information that allows users to evaluate:

• (a) how significant is the effect of financial instruments on the financial position and financial performance of the entity; and
• (b) the nature and extent of the risks to which the entity is exposed during and at the end of the reporting period in connection with financial instruments and how the entity manages those risks.

2 The principles in this IFRS are in addition to the principles for recognizing, measuring and presenting financial assets and financial liabilities in IAS 32 "Financial instruments: presentation of information" and IAS 39 "Financial Instruments: Recognition and Measurement".

Scope of application

3 Real IFRS 7 should be applied by all entities to all types of financial instruments except:

• (a) interests in subsidiaries, associates or joint ventures accounted for in accordance with IAS 27 Consolidated and Separate Financial Statements , IAS 28 Investments in Associates or IAS 31 Interests in Joint Arrangements . However, in some cases, IAS 27, IAS 28 or IAS 31 allow an entity to account for investments in subsidiaries, associates or joint ventures in accordance with IAS 39. In such cases, an entity applies the requirements of this IFRS. Entities apply this IFRS to all derivatives that relate to investments in subsidiaries, associates or joint ventures, unless the derivative meets the definition of an equity instrument in IAS 32.
• (b) the rights and obligations of employers under employee benefit plans to which IAS 19 applies "Employee Benefits".
• (c) [deleted]
• (d) insurance contracts as defined in IFRS 4 "Insurance contracts".
  However, this IFRS applies to derivatives embedded in insurance contracts if IAS 39 requires them to be separately accounted for. In addition, an issuer shall apply this IFRS to financial guarantee agreements if it applies the requirements of IAS 39 for their recognition and measurement. If an issuer accounts for financial guarantee contracts in accordance with paragraph 4(d) of IFRS 4, it applies the requirements of IFRS 4 when recognizing and measuring those contracts.
• (e) financial instruments, contracts and liabilities arising from transactions for which payments are linked to the value of shares to which IFRS 2 applies "Share Based Payment" however, this IFRS applies to contracts that are within the scope of paragraphs 5–7 of IAS 39.
• (f) instruments that must be classified as equity instruments in accordance with paragraphs 16A and 16B or paragraphs 16C or 16D of IAS 32.

4 This Standard applies to financial instruments that are recognized on the balance sheet, as well as to unrecognized financial instruments. Financial instruments recognized on the balance sheet include financial assets and financial liabilities that are within the scope of IAS 39. Financial instruments not recognized on the balance sheet include certain financial instruments that, although not within the scope of IAS 39 ) 39 but are within the scope of this IFRS (for example, separate loan commitments).

5 This IFRS applies to contracts to buy or sell non-financial instruments that
within the scope of IAS 39 (see paragraphs 5–7 of IAS 39).

Types of financial instruments and degree of information disclosure

6 When this IFRS requires disclosures by class of financial instrument, an entity shall group financial instruments into categories that are appropriate for the nature of the disclosures and that take into account the characteristics of those financial instruments. An entity must provide sufficient information to be related to the relevant line items presented in the statement of financial position.

7 An entity shall disclose information that enables users of its financial statements to evaluate the material effect of financial instruments on its financial position and financial performance.

Statement of Financial Position

Categories of financial assets and financial liabilities

8 The carrying amount of each of the following categories, as defined in IAS 39, shall be disclosed either in the statement of financial position or in the notes to the financial statements:

• (a) financial assets at fair value through profit or loss, with separate disclosures
  • (i) assets classified in this category at initial recognition, and
  • (ii) assets classified as held for trading in accordance with IAS 39;
• (b) investments held to maturity;
• (c) loans and receivables;
  (d) available-for-sale financial assets;
  (e) financial liabilities at fair value through profit or loss, disclosed separately
  • (i) liabilities classified in this category at initial recognition, and
  • (ii) liabilities classified as held for trading in accordance with IAS 39; and
• (f) financial liabilities carried at amortized cost.

Financial assets or financial liabilities at fair value through profit or loss

9 If an entity has classified a loan or receivable (or a group of loans or receivables) as a financial asset at fair value through profit or loss, it shall disclose:

• (a) the sum of the maximum credit risk(see paragraph 36(a)) for a loan or receivable (or for a group of loans or receivables) at the end of the reporting period.
• (b) the amount by which any related derivatives or similar credit risk instruments reduce the maximum exposure to credit risk.
• (c) the amount of the change (over a period and cumulatively) in the fair value of a loan or receivable (or a group of loans or receivables) due to a change in the level of credit risk on the financial asset, which is determined by:
  • (i) as the sum of the change in the fair value of an asset that is not attributable to a change in market conditions that gives rise to market risk; or
  • (ii) using an alternative method that the entity believes gives a more reliable representation of the amount of change in the fair value of the asset due to changes in the asset's credit risk.
  Changes in market conditions that give rise to market risk include changes in observable (benchmark) interest rates, commodity prices, foreign exchange rates or a price or rate index.
• (d) the amount of the change in the fair value of any related derivatives or similar credit risk instruments for the period and cumulatively since the loan or receivable was recognized.

10 If an entity has designated a financial liability as a financial liability at fair value through profit or loss in accordance with paragraph 9 of IAS 39, it shall disclose:

• (a) the amount of the change (over a period and cumulatively) in the fair value of a financial liability due to changes in the credit risk of that liability, which is determined by:
  • (i) as the sum of the change in the fair value of the liability that is not attributable to changes in market conditions that give rise to market risk (see paragraph B4 of Appendix B); or
  • (ii) using an alternative method that the entity believes gives a more accurate representation of the amount of the change in the fair value of the liability due to changes in its credit risk.
  Changes in market conditions that give rise to market risk include changes in underlying interest rates, the price of a financial instrument issued by another entity, the price of a commodity, foreign exchange rates, or a price or rate index. For contracts where there is a link to the value of one share, a change in market conditions includes a change in the performance of the relevant internal or external investment fund.

• (b) the difference between the carrying amount of the financial liability and the amount that the entity would have paid the contractual creditor on the date the obligation was settled.

11 An entity shall disclose:

• (a) the methods used where the requirements of paragraphs 9(c) and 10(a) apply.
• (b) if an entity believes that the disclosures it has made in accordance with paragraph 9(c) or 10(a) do not provide a fair representation of the change in the fair value of a financial asset or financial liability due to a change in credit risk, the entity discloses the reasons why to which that conclusion was drawn, and the relevant factors that the entity believes are appropriate in the circumstances.

Reclassification

12 If an entity has reclassified a financial asset (in accordance with paragraphs 51–54
IAS 39), measured by:

• (a) at cost or amortized cost, but not at fair value; or
• (b) at fair value, but not at cost or amortized cost, it shall disclose the amount that has been reclassified into and out of each relevant category and the reason for that reclassification (see paragraphs 51–54 of IAS 39 ).

12A If an entity has reclassified a financial asset out of the fair value through profit or loss category of financial assets in accordance with paragraph 50B or 50D of IAS 39 or out of the available-for-sale financial asset category , in accordance with paragraph 50E of IAS 39, an entity shall disclose:

• (a) the amount removed from one category and transferred to another category on reclassification, in respect of each category affected;
• (b) the carrying and fair values ​​of all financial assets that were reclassified in the current and previous reporting periods, in respect of each period up to derecognition;
• (c) if the financial asset has been reclassified in accordance with paragraph 50B, disclose that rare occurrence and the facts and circumstances that indicate that the occurrence was rare;
• (d) for the reporting period in which the financial asset was reclassified, the increase or decrease in the fair value of the financial asset recognized in profit or loss or other comprehensive income in that reporting period and the previous reporting period;
• (e) for each reporting period after reclassification (including the reporting period in which the financial asset was reclassified) until the derecognition of the financial asset, the increase or decrease in fair value that would have been recognized in profit or loss or other comprehensive income, if if the financial asset had not been reclassified, and income, expenses, gains and losses recognized in profit or loss; and
• (f) the effective interest rate and the estimated cash flows that the entity expects to receive at the date the financial asset is reclassified.

Derecognition

13 An entity may transfer financial assets in such a way that some or all of the financial assets do not qualify for derecognition (see paragraphs 15–37
IAS 39). An entity shall disclose, for each class of those financial assets:

• (a) the nature of the assets;
• (b) the nature of the risks and rewards of ownership of the asset to which the entity remains exposed;
• (c) the carrying amounts of those assets and associated liabilities, if the entity continues to recognize all of the related assets; and
• (d) the total initial carrying amount of the related assets, the amount of assets that the entity continues to recognize and the carrying amount of the associated liabilities when the entity continues to recognize those assets to the extent that it continues to have an interest in them.

Security

14 An entity shall disclose:

• (a) the carrying amount of financial assets that it has pledged as collateral for liabilities or contingent liabilities, including amounts that have been reclassified in accordance with paragraph 37(a) of IAS 39; and
• (b) the terms and conditions of such pledge.

15 When an entity holds collateral (represented by financial or non-financial assets) and has permission from the owner of the collateral to realize or repledge that collateral in the absence of default, it shall disclose:

• (a) the fair value of the collateral held;
• (b) the fair value of any related collateral, whether realized or repledged, and whether the entity has an obligation to return it; and
• (c) the terms and conditions associated with the use of that collateral by the entity.

Credit loss allowance account

16 When financial assets are impaired due to credit losses and an entity accounts for the impairment in a separate account (for example, an allowance account used to account for individual impairment or a similar consolidated account used to account for asset impairment) rather than by direct write-off of the asset's carrying amount, it must provide an analysis of changes in that account for the period for each type of financial asset.

Compound financial instruments with multiple embedded derivatives

17 If an entity has issued an instrument that contains both a liability and an equity component (see paragraph 28 of IAS 32) and multiple derivatives with interdependent values ​​are embedded in that instrument (for example, a callable convertible debt instrument), the entity shall disclose the existing properties of that instrument. tool.

Default and breach of obligations

18 With regard to outstanding loans At the end of the reporting period, an entity shall disclose:

• (a) details of any default during the period in respect of the principal, interest, sinking fund or terms of repayment of such indebtedness;
• (b) the carrying amount of overdue debt on attracted loans at the end of the reporting period; and
• (c) whether any damages arising from a default were recovered or whether the terms of indebtedness on borrowings were renegotiated prior to the date the financial statements were authorized.

19 If during the period there have been breaches of the terms of a loan agreement other than those described in paragraph 18, an entity shall disclose, with respect to those breaches, the disclosures required by paragraph 18 if those breaches allow the lender to require an expedited refund (except cases where damages arising from breaches of terms have been recovered or terms of the loan have been renegotiated at or before the end of the reporting period).

Statement of comprehensive income

Items of income, expenses, profit or loss

20 An entity shall disclose the following items of income, expenses, gains or losses in the statement of comprehensive income or in the notes:

• (a) net gains or net losses from:
  • (i) financial assets or financial liabilities at fair value through profit or loss, with separate disclosures of net gains or losses on financial assets or financial liabilities classified in that category at initial recognition and on financial assets or financial liabilities classified as held for trading in accordance with IAS 39;
  • (ii) available-for-sale financial assets, showing separately the amount of gain or loss recognized in other comprehensive income during the period and the amount transferred from equity to profit or loss for the period;
  • (iii) investments held to maturity;
  • (iv) loans and receivables; and
  • (v) financial liabilities measured at amortized cost;
• (b) total interest income and total interest expense (calculated using the effective interest method) on financial assets or financial liabilities that are not measured at fair value through profit or loss;
• (c) fee and commission income and expenses (excluding amounts included in the determination of the effective interest rate) related to:
  • (i) financial assets or financial liabilities that are not measured at fair value through profit or loss; and
  • (ii) trusts and other fiduciary transactions that result in the holding or investment of assets on behalf of individuals, investment funds, pension plans and other entities;
• (d) interest income on impaired financial assets accrued in accordance with paragraph AG93 of IAS 39; and
• (e) the amount of any impairment loss for each class of financial asset.

Disclosure of other information

Accounting policy

21 In accordance with paragraph 117 of IAS 1 "Presentation of Financial Statements"(as amended
2007) an entity discloses, in a summary of significant accounting policies, the basis(s) of measurement used in preparing the financial statements and other accounting policies that are relevant to an understanding of the financial statements.

hedge accounting

22 An entity shall disclose the following separately for each type of hedge described in IAS 39 (ie fair value hedge, cash flow hedge and hedge of a net investment in a foreign operation):

• (a) a description of each type of hedge;
• (b) a description of the financial instruments designated as hedging instruments and their fair value at the end of the reporting period; and
• (c) the nature of the risks being hedged.

23 In a cash flow hedge, an entity shall disclose:

• (a) the periods in which cash flows are expected and the periods in which they are expected to affect profits and losses;
• (b) a description of any forecast transaction that was previously subject to hedge accounting but is no longer expected to occur;
• (c) the amount recognized in other comprehensive income during the period;
• (d) the amount transferred from equity to profit or loss for the period, disclosing the amounts for each line item in the statement of comprehensive income; and
• (e) the amount removed from equity during the period and charged to the cost or other carrying amount of the non-financial asset or non-financial liability the acquisition or occurrence of which was the hedged highly probable forecast transaction.

24 An entity shall separately disclose:

• (a) for fair value hedges, gains or losses:
  • (i) for the hedging instrument; and
  • (ii) on the hedged item arising from the hedged risk.
• (b) ineffectiveness recognized in profit or loss to hedge cash flows; and
• (c) ineffectiveness recognized in profit or loss to hedge net investments in foreign operations.

fair value

25 Except as provided in paragraph 29, for each class of financial asset and financial liability (see paragraph 6), an entity shall disclose fair value in a manner that allows it to be compared with the carrying amount.

26 When disclosing fair value, an entity shall group financial assets and financial liabilities by type, but shall offset them only to the extent that their carrying amounts are offset in the statement of financial position.

27 An entity shall disclose:

• (a) the methods and, if a valuation technique is used, the assumptions used in determining the fair value of each class of financial asset or financial liability. For example, if applicable, an entity discloses information about the assumptions made about the level of prepayments, the level of estimated credit losses, and interest or discount rates.
• (b) whether fair value was determined wholly or partly directly from published price quotations in an active market or calculated using a valuation technique (see paragraphs AG71–AG79 of IAS 39).
• (c) whether all or part of the fair value recognized or disclosed in the financial statements was determined using a valuation technique based on assumptions that are not supported by prices in observable current market transactions in the same instrument (i.e., without modification or reversal), and not based on available observable market data. For fair values ​​recognized in the financial statements, if changing one or more of those assumptions to reasonably possible alternative assumptions would change the fair value significantly, the entity shall state that fact and disclose the effect of those changes. For this purpose, the assessment of materiality of impact should be made in relation to profit or loss, total assets or liabilities, or total equity, if the change in fair value is recognized in other comprehensive income.
• (d) if paragraph (c) applies, disclose the total change in fair value that was recognized in profit or loss during the period, calculated using that methodology.

28 When the market for a financial instrument is not active, an entity establishes its fair value using a valuation technique (see paragraphs AG74–AG79 of IAS 39). However, the best evidence of fair value at initial recognition is the transaction price (ie the fair value of the consideration given or received) unless the conditions in paragraph AG76 of IAS 39 are met. It follows that there may be a difference between fair value at initial recognition and the amount that would be determined at that date using a valuation technique. If such a difference exists, an entity shall disclose the following information by class of financial instrument:

• (a) the accounting policy for recognizing that difference in profit or loss to reflect changes in the factors (including timing) that market participants would consider when pricing (see paragraph AG76A of IAS 39); and
• (b) the cumulative difference that is yet to be recognized in profit or loss at the beginning and end of the period, and a reconciliation of the change in the balance of that difference.

29 Fair value disclosure is not required:

• (a) when the carrying amount approximates fair value, such as for financial instruments such as short-term trade receivables and payables;
• (b) for investments in equity instruments that are not quoted in an active market, or for derivatives linked to such equity instruments that are measured at cost in accordance with IAS 39 because their fair value cannot be reliably valued;
• (c) for a contract that contains a discretionary participation feature (as described in IFRS 4), if the fair value of that feature cannot be measured reliably.

30 In the situations described in paragraph 29(b) and (c), an entity shall disclose information that would enable users of the financial statements to form their own judgment about the extent of possible differences between the carrying amounts of those financial assets or financial liabilities and their fair values, including :

• (a) a statement that the fair value of those instruments has not been disclosed because their fair value cannot be measured reliably;
• (b) a description of those financial instruments, their carrying amount and an explanation of why fair value cannot be measured reliably;
• (c) market information for those instruments;
• (d) whether the entity intends to sell those financial instruments and how; and
• (e) if financial instruments for which the fair value could not previously be measured reliably are derecognised, disclose the derecognition, the carrying amount of the related financial instruments at the time they were derecognised, and the amount of recognized gains or losses.

The nature and extent of risks associated with financial instruments

31 An entity shall disclose information that enables users of financial statements to evaluate the nature and extent of the risks associated with financial instruments to which the entity is exposed at the end of the reporting period.

32 The disclosures required in paragraphs 33–42 govern the risks that arise from financial instruments and how risk is managed. These risks usually include credit risk, liquidity risk and market risk, but are not limited to them.

Disclosure - qualitative characteristics

33 For each type of risk arising from financial instruments, an entity shall disclose:

• (a) the enterprise's exposure to risks and how they arise;
• (b) the entity's risk management objectives, policies and procedures and the methods used by the entity to assess risk; and
• (c) any change in (a) or (b) from the previous period.

Disclosure - Quantitative Characteristics

34 For each type of risk arising from financial instruments, an entity shall disclose:

• (a) summary quantitative data on the entity's exposure to risk at the end of the reporting period. This disclosure must be based on internal information provided to key management members (in accordance with IAS 24 "Related Party Disclosures"), for example, the board of directors or the general director of the enterprise.
• (b) the disclosures required by paragraphs 36–42, to the extent not required by paragraph (a), unless the risk is immaterial (materiality is addressed in paragraphs 29–31 of IAS 1 ).
• (c) information on the concentration of risks, if this is not clear from points (a) and (b).

35 If the quantitative disclosures as of the end of a reporting period do not provide a correct representation of an entity's exposure to risk during the period, an entity shall provide further information to provide such an understanding.

Credit risk

36 An entity shall disclose the following information by class of financial instrument:

• (a) the amount that best reflects the entity's maximum exposure to credit risk at the end of the reporting period, excluding any collateral held or other credit enhancements used (for example, netting arrangements that do not qualify for netting under IAS ) 32);
• (b) for the amount disclosed in accordance with paragraph (a), a description of the collateral held and other credit enhancements;
• (c) information about the credit risk quality of financial assets that are not overdue or impaired; and
• (d) the carrying amount of financial assets that would be past due or impaired if their terms had not been renegotiated.

Past due or impaired financial assets

37 An entity shall disclose the following information by class of financial instrument:

• (a) an analysis of the life of financial assets that are past due but not impaired at the end of the reporting period;
• (b) an analysis of financial assets that are individually determined to be impaired at the end of the reporting period, including the factors the entity considered in determining whether those assets were impaired; and
• (c) for the amounts disclosed in accordance with paragraphs (a) and (b), a description of the collateral held by the entity and other credit enhancements used and, if practicable, an estimate of their fair value.

Collateral received and other credit enhancement mechanisms used

38 If, during the period, an entity obtains financial or non-financial assets by foreclosing on held collateral or by implementing other credit enhancements (for example, by using guarantees) and those assets meet the recognition criteria in other Standards, the entity shall disclose:

• (a) the nature and carrying amount of the assets received; and
• (b) where the assets are not readily convertible into cash, the entity's policy regarding the disposal of such assets or the use of them in its operations.

Liquidity risk

39 An entity shall disclose:

• (a) analysis of financial liabilities by maturity remaining at the end of the reporting period in accordance with the contract; and
• (b) a description of how the entity manages the liquidity risk identified in accordance with paragraph (a).

Market risk

Sensitivity analysis

40 When an entity does not meet the requirements in paragraph 41, it shall disclose:

• (a) an analysis of the entity’s sensitivity to each type of market risk to which it is exposed at the end of the reporting period, reflecting the effect on the entity’s profit or loss and equity of changes in the relevant variable that determines the level of risk that were reasonably possible on this date;
• (b) the methods and assumptions used in preparing the sensitivity analysis; and
• (c) changes in the methods and assumptions used from the previous period and the reasons for such changes.

41 If an entity prepares a sensitivity analysis, such as a risk valuation approach that reflects the relationship between risk variables (for example, interest rates and foreign exchange rates), and uses it in financial risk management, it may use that sensitivity analysis instead of the analysis specified in paragraph 40. An entity must also disclose:

• (a) an explanation of the method used in the preparation of such sensitivity analysis and the main parameters and assumptions underlying the data provided; and
• (b) an explanation of the purpose of the method used and the limitations that may cause the information to not fully reflect the fair value of the related assets and liabilities.

Disclosure of other information about market risks

42 When the sensitivity analysis disclosed in accordance with paragraphs 40 or 41 does not adequately represent the risk inherent in a financial instrument (for example, because the year-end risk disclosures do not reflect an entity’s exposure to risk during the year), an entity shall disclose that risk. the fact and reason why it believes this sensitivity analysis does not correctly represent the risks.

Date of entry into force and transition to a new accounting procedure

43 An entity shall apply this IFRS for annual periods beginning on or after 1 January 2007. Early application is welcome. If an entity applies this IFRS for an earlier period, it shall disclose that fact.

44 If an entity applies this IFRS for annual periods beginning before 1 January 2006, it need not provide comparative data for the disclosures required by paragraphs 31–42 about the nature and extent of the risks associated with financial instruments. .

44A IAS 1 (as revised in 2007) amended the terminology used in International Financial Reporting Standards (IFRS). Moreover, that standard amended paragraphs 20,
Appendix B 21, 23(c) and (d), 27(c) and B5. An entity shall apply these amendments for annual periods beginning on or after January 1, 2009. If an entity applies IAS 1 (as revised in 2007) for an earlier period, the amendments must also be applied for that earlier period.

44In IFRS 3 (as revised in 2008), caused paragraph 3(c) to be deleted. An entity shall apply this amendment for annual periods beginning on or after 1 July 2009. If an entity applies IFRS 3 (as revised in 2008) for an earlier period, the amendment shall also be applied for that earlier period.

44C An entity shall apply the amendment in paragraph 3 to annual periods
beginning on or after January 1, 2009. If an enterprise applies the publication
« Puttable Financial Instruments and Obligations Arising on Liquidation”(Amendments to IAS 32 and IAS 1) issued in February 2008 for an earlier period, the amendment in paragraph 3 shall apply for that earlier period.

44D Paragraph 3(a) has been amended to comply with “ Improvements in IFRS, issued in May 2008. An entity shall apply the amendment for annual periods beginning on or after 1 January 2009. Early application is permitted. If an entity applies the amendment for an earlier period, it shall disclose that fact and apply, for that earlier period, the amendments to paragraph 1 of IAS 28, paragraph 1 of IAS 31 and paragraph 4 of IAS 32 issued by in May 2008. An entity may apply the amendment prospectively.

44E Publication " (Amendments to IAS 39 and IFRS 7), issued in October 2008, amended paragraph 12 and added paragraph 12A. 44E. An entity shall apply the amendment on or after 1 July 2008.

44F Publication " Reclassification of financial assets”(Amendments to IAS 39 and IFRS 7), issued in November 2008, amended paragraph 44E. An entity shall apply the amendment on or after 1 July 2008.

Termination of IAS 30

45 This IFRS replaces IAS 30 "Disclosure in the Financial Statements of Banks and Similar Financial Institutions".

Appendix A: "Definition of Terms"

currency risk	The risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in foreign exchange rates.
debt on attracted loans	Outstanding borrowings represent financial liabilities that are not short-term trade payables with standard deferred payment terms.
credit risk	The risk that one party to a financial instrument will cause financial loss to the other party by defaulting on its obligations.
overdue assets	A financial asset is considered past due when the counterparty to the transaction fails to make payment by the due date specified in the contract.
interest rate risk	The risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market interest rates.
liquidity risk	The risk that an entity will encounter difficulty in meeting financial obligations.
market risk	The risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market prices. Market risk includes three types of risks: currency risk, interest rate risk and other price risk.
price risk associated with changes in other prices	The risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market prices (other than changes that result in percentage or currency risks) regardless of whether these changes are caused by factors that are unique to a particular financial instrument or its issuer, or factors that affect all similar financial instruments traded on the market.

The following terms are defined in paragraph 11 of IAS 32 or paragraph 9 of IAS 39 and are used in this IFRS with the meanings given in IAS 32 and IAS 39.

• amortized cost of a financial asset or financial liability
• financial assets available-for-sale
• derecognition
• derivative instrument
• effective interest method
• equity instrument
• fair value
• financial asset
• financial assets or financial liabilities at fair value through profit or loss
• financial asset or financial liability held for trading
• financial guarantee agreement
• financial instrument
• financial liability
• projected operation
• hedging instrument
• investments held to maturity
• loans and receivables
• standard procedure for buying or selling

Appendix B: "Application Guide"

This appendix is ​​an integral part of this IFRS.

Types of Financial Instruments and Level of Disclosure (Item 6)

B1 Paragraph 6 requires an entity to classify financial instruments into classes according to the nature of the disclosures and taking into account the characteristics of those financial instruments. An entity determines the types of financial instruments described in paragraph 6. Therefore, these types of financial instruments are different from the categories of financial instruments in IAS 39 (which governs how financial instruments are measured and where changes in fair value are reflected).

B2 In determining classes of financial instruments, an entity shall, as a minimum:

• (a) distinguish between instruments measured at amortized cost and instruments measured at fair value.
• (b) treat as a separate class or classes those financial instruments that are not within the scope of this IFRS.

B3 An entity decides, based on its own circumstances, how detailed the information provided in accordance with the requirements of this IFRS should be, how much weight should be given to different aspects of the requirements, and how to combine information to show the big picture without aggregating information with different characteristics. A balance must be struck between providing too much detail in the financial statements that may not be useful to users of the financial statements and leaving important information hidden or unclear through overgeneralization. For example, an enterprise should not hide important information by placing it among a large number of insignificant details. Similarly, an entity should not disclose information that is so aggregated that it does not allow important distinctions to be made between individual transactions and the risks associated with them.

The significance of financial instruments for financial position and performance

Financial liabilities at fair value through profit or loss (paragraphs 10 and 11)

B4 If an entity classifies a financial liability as at fair value through profit or loss, paragraph 10(a) requires disclosure of the amount of the change in the fair value of the financial liability to the extent that it reflects the change in the credit risk of that liability. Paragraph 10(a)(i) allows an entity to designate that amount as the amount of the change in the fair value of the liability that does not relate to changes in market conditions that give rise to market risk. If changes in the observed (base) interest rate are the only such changes in market conditions, this amount can be calculated as follows:

• (a) An entity first calculates the internal rate of return on the liability at the beginning of the period, using the observable market price for the liability under analysis and the cash flows of the liability in accordance with the contract at the beginning of the period. To determine the share of the internal rate of return that is directly attributable to the instrument in question, the value of the calculated total rate of return for the instrument is reduced by the observed (base) interest rate at the beginning of the period.
• (b) The entity then calculates the present value of the liability's cash flows using the contractual cash flows of the liability at the end of the period and a discount rate equal to
  • (i) the observed (benchmark) interest rate at the end of the period, and
  • (ii) the component of the internal rate of return that relates directly to the instrument itself and is determined in accordance with paragraph (a).
• (c) The difference between the observed market price of the liability at the end of the period and the amount determined in accordance with paragraph (b) is a change in fair value that is not attributable to a change in the observed (benchmark) interest rate. This is the amount to be disclosed.

This example assumes that changes in fair value due to factors other than changes in the instrument's credit risk or changes in interest rates are immaterial. If the instrument in the example contains an embedded derivative, the change in the fair value of the embedded derivative is not taken into account in determining the amount to be disclosed in accordance with paragraph 10(a).

Disclosures of other information – accounting policies (paragraph 21)

B5 Paragraph 21 requires disclosure of the measurement basis(s) used in the preparation of the financial statements and other accounting policies that are relevant to an understanding of the financial statements. For financial instruments, such disclosure may include:

• (a) for financial assets or financial liabilities classified as financial assets or financial liabilities at fair value through profit or loss:
  • (i) the nature of the financial assets or financial liabilities classified in this category;
  • (ii) the criteria for such classification at initial recognition; and
  • (iii) how the entity met the conditions in paragraphs 9, 11A or 12 of IAS 39 for that classification. For instruments recognized in accordance with the definition of a financial asset or financial liability at fair value through profit or loss in paragraph (b)(i) of IAS 39, you must also describe the circumstances that, if a different classification would result in inconsistent measurement or recognition of such instruments. For instruments recognized in accordance with the definition of a financial asset or financial liability at fair value through profit or loss in paragraph (b)(ii) of IAS 39, you also need to describe how recognition at fair value, through profit or loss, is in line with the entity's approved risk management or investment strategy.
• (b) criteria for classifying financial assets as available-for-sale.
• (c) whether regular way purchases or sales of financial assets are accounted for: trade date or settlement date (see paragraph 38 of IAS 39).
• (d) where an allowance account is used to reduce the carrying amount of credit-impaired financial assets:
  • (i) the criteria used to determine when there is a direct decrease in the carrying amount of impaired financial assets (and when write-offs are recovered, they are reversed on the balance sheet) and when an allowance account is used; and
  • (ii) the terms for writing off impaired financial assets against the allowance (see paragraph 16).
• (e) how net gains or net losses are determined for each category of financial instruments (see paragraph 20(a)). For example, whether net gains or net losses on items at fair value through profit or loss include interest income or dividend income.
• (f) the criteria an entity uses to determine whether there is objective evidence that an impairment loss has occurred (see paragraph 20(e)).
• (g) when renegotiating financial assets that would otherwise be past due or impaired, disclose the accounting policy for the financial assets that are the subject of the renegotiation (see paragraph 36(d)).

Paragraph 122 of IAS 1 (as revised in 2007) also requires entities to disclose, in a summary of significant accounting policies or other notes, judgments (other than judgments related to accounting estimates made by management in the process of applying the entity's accounting policies and which have the most significant effect on the amounts recognized in the financial statements.

Nature and Extent of Risks Relating to Financial Instruments (paragraphs 31-42)

B6 The information disclosed in accordance with paragraphs 31–42 must be contained in the financial statements themselves or must be presented in the financial statements by reference to another report, such as a management commentary or risk statement, that is available to users of the financial statements under the same terms and conditions. the same time as the financial statements themselves. Without such cross-referenced information, the financial statements are incomplete.

Disclosures - Quantitative Characteristics (paragraph 34)

B7 Paragraph 34(a) requires disclosure of summary quantitative data about the risk to which an entity is exposed, based on inside information provided to key members of the entity's management. When an entity uses more than one method of managing risk, the entity should disclose information using the method or methods that provide the most relevant and reliable information. Relevance and reliability issues are addressed in IAS 8 "Accounting Policies, Changes in Accounting Estimates and Errors".

B8 Paragraph 34(c) requires disclosure of risk concentrations. Concentrations of risk arise from financial instruments that have similar characteristics and are similarly affected by changes in economic or other conditions. In determining the concentration of risk, professional judgment is required, taking into account the circumstances of the enterprise. Disclosure of risk concentration information should include:

• (a) a description of how management determines whether a concentration exists;
• (b) a description of the specific general characteristic that distinguishes each concentration
  (for example, counterparty, region, currency or market); and
• (c) the amount of risk on all financial instruments combined by this feature.

Maximum Credit Risk (paragraph 36(a))

B9 Paragraph 36(a) requires disclosure of the amount that best reflects the entity's maximum exposure to credit risk. For a financial asset, this is typically the carrying amount (before any impairment is recognized) less:

• (a) any amounts offset in accordance with IAS 32; and
• (b) any impairment loss recognized in accordance with IAS 39.

B10 Activities that give rise to credit risk, and therefore the maximum exposure to credit risk, include, but are not limited to:

• (a) extending loans and deferrals to customers and placing deposits with other businesses. In these cases, the maximum exposure to credit risk is equal to the carrying amount of the related financial assets.
• (b) derivatives, such as foreign exchange contracts, interest rate swaps and credit derivatives. Where the resulting asset is measured at fair value, the asset's maximum exposure to credit risk at the end of the reporting period will be equal to its carrying amount.
• (c) provision of financial guarantees. In this case, the maximum exposure to credit risk is equal to the maximum amount that the entity would have to pay if the guarantee were to be enforceable, and this amount may be significantly greater than the amount recognized by the entity as a liability.
• (d) making a commitment to a loan that is not revocable during the term of the contract or can only be revoked in the event of a material adverse change. If the entity that has assumed the loan obligation is unable to settle net with the delivery of cash or another financial instrument, the maximum exposure to credit risk is equal to the full amount of the loan commitment. This is due to the uncertainty as to how much of the unused amount will be claimed in the future. The maximum amount of risk may be significantly greater than the amount recognized by the company as a liability.

Contractual maturity analysis (paragraph 39(a))

B11 In preparing a contractual maturity analysis of financial liabilities, as required by paragraph 39(a), an entity uses its judgment to determine the appropriate number of time slots. For example, an entity may determine that the following intervals are most appropriate:

• (a) not more than one month;
• (b) more than one month but less than three months; (c) more than three months but less than one year; and (d) more than one year but less than five years.

B12 When the counterparty has a choice of when to pay, the liability is included in a time interval based on the earliest date by which the entity can be required to pay. For example, financial liabilities that an entity must repay on demand (such as demand deposits) are included in the earliest time frame.

B13 When an entity undertakes to pay in installments, each payment is attributed to the earliest period in which the entity can be required to pay. For example, the portion of an entity's loan obligation that is not used by the counterparty is included in the time interval containing the earliest date on which it can be called.

B14 The amounts disclosed in the maturity analysis are the undiscounted contractual cash flows, for example:

• (a) gross finance lease liabilities (before deducting the cost of financing);
• (b) prices quoted in forward contracts to purchase financial assets for cash;
• (c) the net amounts of interest rate swap agreements paying floating rate interest and receiving fixed rate payments that involve settlement by offsetting counterclaims (net settlements).
• (d) the amounts required by the contract to be exchanged between the parties in a derivative financial instrument (for example, a currency swap) if the contract provides for settlement in gross cash flows; and
• (e) the total loan commitments.

These undiscounted cash flows differ from the amounts shown in the statement of financial position because the amounts shown in the statement of financial position are determined based on discounted cash flows.

B15 When appropriate, an entity shall present an analysis of derivative financial instruments separately from an analysis of non-derivative financial instruments in the maturity analysis of financial liabilities required by paragraph 39(a). For example, it would be appropriate to separate cash flows from derivatives and non-derivative financial instruments if the derivative financial instruments are settled in gross cash flows. This is because a gross cash outflow can be accompanied by a corresponding inflow.

B16 Where the amount payable is not a fixed amount, the amount disclosed is determined by reference to conditions existing at the end of the reporting period. For example, when the amount payable varies based on changes in an index, the amount disclosed may be based on the level of the index at the end of the reporting period.

Market risk – sensitivity analysis (paragraphs 40 and 41)

B17 Paragraph 40(a) requires a sensitivity analysis to be performed for each type of market risk to which an entity is exposed. In accordance with paragraph B3, an entity decides how it combines information to show the big picture, without combining information with different characteristics, about exposure to risks arising from large differences in the economic environment. For example:

• (a) an entity that trades in financial instruments may disclose this information separately for financial instruments held for trading and for financial instruments that are not held for trading.
• (b) an entity shall not combine market risks to which an entity is exposed in hyperinflationary regions with market risks to which an entity is exposed to regions with very low inflation.

If an entity is exposed to only one type of market risk in one economic environment, it does not need to show disaggregated information.

B18 Paragraph 40(a) requires a sensitivity analysis to show the effect on the entity’s profit or loss and equity of changes in the relevant risk variable that were reasonably possible (for example, changes in prevailing market interest rates, foreign exchange rates , prices of equity instruments or commodities). To this end:

• (a) entities are not required to determine what the profit or loss would be for the period if the relevant risk variables were different. Instead, entities disclose the effect on profit or loss and equity at the end of the reporting period assuming that a reasonably possible change in the relevant risk variable occurred at the end of the reporting period and were applied to the risks that existed at that date. For example, if an entity had a liability at the end of the year that would pay interest at a floating rate, the entity would be required to disclose the effect on profit or loss (i.e., interest expense) for the current year if a change in the interest rate to a reasonable possible size.
• (b) entities are not required to show the effect on profit or loss and equity of each change within the range of reasonably possible changes in the associated change in risk. It is enough to reveal the effects of changes that are on the boundaries of a reasonably possible range.

B19 In determining the reasonably possible change in the relevant risk variable, an entity shall consider the following:

• (a) the economic environment in which it operates. Reasonably possible changes should not include unlikely or "worst case" scenarios or "stress tests". In addition, if the rate of change in the underlying risk variable is constant, the entity does not need to revisit the chosen reasonably possible change in the risk variable. For example, suppose the interest rate is 5 percent and the entity determines that a fluctuation of ±50 basis points in the interest rate is reasonably possible. The entity will disclose the effect on profit or loss and equity of a reduction in the interest rate to 4.5 percent or an increase to 5.5 percent. In the next period, the interest rate rose to 5.5 percent. The entity continues to believe that the interest rate can fluctuate within ±50 basis points (ie, the rate of change in the interest rate is constant). The entity will disclose the effect on profit or loss and equity if the interest rate falls to 5 percent or rises to 6 percent. The entity will not need to revise its estimate that the interest rate may fluctuate within ±50 basis points, unless there is evidence of a significant increase in interest rate volatility.
• (b) the time period for which it makes the estimate. A sensitivity analysis should show the impact of changes that are considered reasonably possible over the period up to the entity's next disclosure. Usually this is the next annual reporting period of the enterprise.

B20 Paragraph 41 allows an entity to use a sensitivity analysis that reflects relationships between risk variables, such as risk valuation analysis, if the entity uses that analysis to manage financial risks. This applies even if the methodology only measures potential losses and does not measure potential profits. Such an entity could comply with the requirements of paragraph 41(a) by disclosing the version of the risk valuation model used (for example, whether it uses Monte Carlo simulations), an explanation of how the model works, and key assumptions (for example, holding period and level of confidence). Businesses may also disclose the historical period of the observation and the weights applied to the observations during that period and an explanation of how variations are taken into account in the calculations and which coefficients of variability (volatility) and correlation are used (or, alternatively, a Monte -Carlo).

B21 An entity must present sensitivity analyzes for all of its business but may present different types of sensitivity analyzes for different types of financial instruments.

Interest risk

B22 Interest risk arises for interest-bearing financial instruments recognized in the statement of financial position (for example, loans and receivables, debt instruments issued) and for certain financial instruments not recognized in the statement of financial position (for example, certain loan commitments).

Currency risk

B23 Currency risk arises from financial instruments denominated in a foreign currency, that is, in a currency other than the functional currency in which they are measured. For the purposes of this IFRS, foreign exchange risk is not considered to arise from financial instruments that are non-monetary items or from financial instruments denominated in functional currencies.

B24 A sensitivity analysis is disclosed for each currency against which the entity has significant exposure.

Price risk associated with changes in other prices

B25 Price risk associated with changes in other prices, arises for financial instruments due to changes in, for example, the prices of commodities or equity instruments. To comply with paragraph 40, an entity may disclose the effect of a decrease in a specified stock market index, commodity price, or other risk variable. For example, if an entity issues residual value guarantees that are financial instruments, the entity discloses information about increases or decreases in the value of the assets to which the guarantee applies.

B26 Two examples of financial instruments that give rise to equity price risk are (a) investments in equity instruments of another entity and (b) investments in a trust that in turn invests in equity instruments. Other examples include forward contracts and options to buy or sell a specified number of equity instruments, and swaps that are indexed to equity prices. The fair value of such financial instruments is affected by changes in the market price of the underlying equity instruments.

B27 In accordance with paragraph 40(a), information about the sensitivity of profit or loss (arising, for example, from instruments classified as at fair value through profit or loss and from the impairment of financial assets held available-for-sale) is disclosed separately from equity sensitivity (arising, for example, in relation to instruments classified as available-for-sale).

B28 Financial instruments that an entity classifies as equity instruments are not remeasured. Neither profit or loss nor equity will be affected by the price risk of these equity instruments. Accordingly, sensitivity analysis is not required.

APPLICATION GUIDE

This appendix is ​​an integral part of this IFRS.

Classes of Financial Instruments and Level of Detail of Disclosures (Item 6)

B1 Paragraph 6 requires an entity to group financial instruments into classes according to the nature of the disclosures and taking into account the characteristics of those financial instruments. The classes described in paragraph 6 are defined by the entity and thus differ from the categories of financial instruments in IFRS 9 (which determine how financial instruments are measured and where changes in fair value are recognized).

B2 In determining classes of financial instruments, an entity shall, at a minimum:

(a) distinguish between instruments measured at amortized cost and instruments measured at fair value;

(b) treat as a separate class or classes those financial instruments that are not within the scope of this IFRS.

B3 An entity decides, based on its own circumstances, how detailed the disclosures need to be in order to comply with the requirements of this IFRS, the significance of various aspects of those requirements, and the level of aggregation required to show the big picture without aggregating the information. with different characteristics. A balance needs to be struck between financial statements that are overloaded with details that may be of no use to users of financial statements and that are over-generalized, which may result in important information being hidden. For example, an organization should not hide important information by placing it among a large number of minor details. Similarly, an entity should not disclose information that is so aggregated that it does not allow important distinctions to be made between individual transactions or the risks associated with them.

B4 Deleted.

Disclosures of other information - accounting policies (paragraph 21)

B5 Paragraph 21 requires disclosure of the measurement basis(s) used in the preparation of the financial statements and other accounting policies relevant to an understanding of the financial statements. For financial instruments, such disclosures may include:

(a) For financial assets or financial liabilities designated as at fair value through profit or loss:

(i) information about the nature of the financial liabilities that the entity designates as at fair value through profit or loss;

(ii) the criteria for classifying such financial assets and financial liabilities into this category at initial recognition; and

(iii) a description of how the entity has met the conditions in paragraph 4.2.2 of IFRS 9 with respect to that classification.

(b) For financial assets designated by the entity as at fair value through profit or loss:

(i) information about the nature of the financial assets that the entity has designated as at fair value through profit or loss; and

(ii) a description of how the entity has met the conditions in paragraph 4.1.5 of IFRS 9 with respect to that classification.

(c) For regular way transactions to buy or sell financial assets, whether the accounting treatment is used at the date the transaction is entered into or the date the transaction is settled (see paragraph 3.1.2 of IFRS 9).

(d) Excluded.

(e) How net gains or net losses are determined for each category of financial instruments (see paragraph 20(a)), for example, whether net gains or net losses on items at fair value through profit or loss include interest income or dividend income.

(f) - (g) Excluded.

Paragraph 122 of IAS 1 (as revised in 2007) also requires entities to disclose, in the summary of significant accounting policies or other notes, judgments (other than judgments involving estimates that have been made by management in the process of applying the accounting policies). entities and which have the most significant influence on the amounts recognized in the financial statements).

Nature and Extent of Risks Relating to Financial Instruments (paragraphs 31–42)

B6 The disclosures required by paragraphs 31–42 must either be contained within the financial statements themselves or be included by cross-reference from the financial statements to another report, such as a management commentary or a risk statement that is available to users of those financial statements at under the same conditions and at the same time as the financial statements themselves. Without such cross-referenced information, the financial statements are incomplete.

Quantitative Disclosure (paragraph 34)

B7 Paragraph 34(a) requires an entity to disclose quantitatively aggregated exposures based on internal information provided to key management personnel of the entity. When an entity uses more than one method of managing risk, the entity shall disclose information using the method or methods that provide the most relevant and reliable information. Relevance and reliability are addressed in IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors.

B8 Paragraph 34(c) requires disclosure of risk concentrations. Concentrations of risk arise from financial instruments that have similar characteristics and are equally affected by changes in economic or other conditions. Judgment is required to determine risk concentrations, taking into account the circumstances of the entity. Disclosures about concentrations of risk should include:

(a) a description of how management determines concentrations;

(b) a description of the specific general characteristic that distinguishes each concentration (for example, counterparty, geographic region, currency, or market); and

(c) the amount of exposure to risk for all financial instruments that share this common characteristic.

Credit risk management practices (paragraphs 35F–35G)

B8A Paragraph 35F(b) requires disclosure of how an entity has defined default for various financial instruments and the reasons for choosing those definitions. In accordance with paragraph 5.5.9 of IFRS 9, the determination of whether lifetime ECL should be recognized is based on the increase in the risk of default since initial recognition. Information about an entity's definitions of default that helps users of financial statements understand how an entity has applied the expected credit loss requirements in IFRS 9 may include:

(a) the qualitative and quantitative factors considered in determining default;

(b) whether different types of definitions have been applied to different classes of financial instruments; and

(c) assumptions about the return on default rate (ie the number of financial assets that return to their counterparty-settled status) after the financial asset has defaulted.

B8B To help users of financial statements evaluate an entity's policy to restructure and modify financial instruments, paragraph 7.35F(f)(i) requires disclosures about how an entity monitors the extent to which the loss allowance for financial assets previously disclosed in accordance with paragraph 7.35F(f)(i) is subsequently measured at an amount equal to lifetime expected credit losses in accordance with paragraph 5.5.3 of IFRS 9. Quantitative information that will help users understand the subsequent an increase in credit risk on modified financial assets may include data on modified financial assets that meet the criteria in paragraph 7.35F(f)(i) for which the loss allowance has become measured at an amount equal to expected credit losses for lifetime (i.e. degradation factor).

B8C Paragraph 35G(a) requires disclosures about the basis of inputs, assumptions and valuation models used to apply the impairment requirements in IFRS 9. The assumptions and inputs used by an entity to measure expected credit risks since initial recognition may include historical inside information or information from rating reports, as well as assumptions about the expected life of financial instruments and the timing of the sale of collateral.

Changes in loss allowance (paragraph 35H)

B8D Paragraph 35H requires an entity to explain the reasons for changes in the loss allowance during the period. In addition to reconciling the opening loss allowance balance to the closing balance, a descriptive explanation of the changes may be required. Such a descriptive explanation may include an analysis of the reasons for changes in the loss allowance during the period, including the following:

(a) portfolio composition;

(b) the number of financial instruments acquired or originated; and

(c) the severity of expected credit losses.

B8E For loan commitments and financial guarantee contracts, a loss allowance is recognized as a provision. An entity shall disclose information about changes in the loss allowance for financial assets separately from changes in the loss allowance for loan commitments and financial guarantee contracts. However, if a financial instrument includes both a loan component (i.e. a financial asset) and an undrawn loan commitment component (i.e. a loan commitment) and the entity cannot separately identify the expected credit losses for the component loan commitments and expected credit losses on the financial asset component, the expected credit losses on the loan commitment should be recognized together with the loss allowance for the financial asset. To the extent that the cumulative expected credit losses exceed the gross carrying amount of the financial asset, the expected credit losses should be recognized as a provision.

Security (paragraph 35K)

B8F Paragraph 35K requires disclosures that enable users of financial statements to understand the effect of collateral and other credit enhancements on expected credit losses. An entity is not required to disclose the fair value of collateral and other credit enhancements, nor the quantitative information about the exact value of collateral used in calculating expected credit losses (ie loss if default).

B8G A description of the collateral and its effect on expected credit losses may include the following information:

(a) the main types of collateral held as collateral and other credit enhancements (examples of the latter are guarantees, credit derivatives and netting arrangements that do not qualify for netting under IAS 32);

(b) the amount of collateral held and other credit enhancements and their significance in the context of the loss allowance;

(c) policies and procedures for the evaluation and management of collateral and other credit enhancements;

(d) major collateral and other credit enhancement counterparties and their creditworthiness; and

(e) information about concentrations of risk in collateral and other credit enhancements.

Exposure to credit risk (paragraphs 35M - 35N)

B8H Paragraph 35M requires disclosure of an entity's exposure to credit risk and significant concentrations of credit risk at the reporting date. Credit risk concentrations occur when multiple counterparties are located in the same geographic area or engage in similar activities and have similar economic characteristics, such that their ability to meet their contractual obligations is similarly affected by changes in economic or other conditions. An entity shall provide information that helps users of financial statements understand the existence of groups or portfolios of financial instruments with specific characteristics that can affect the majority of that group of financial instruments, such as concentrations of certain risks. This could include, for example, grouping based on collateral ratio, geographic concentration, industry concentration, or issuer class concentration.

B8I The number of levels of credit risk ratings used for disclosures in accordance with paragraph 35M shall match the number that an entity discloses to key management personnel for credit risk management purposes. If past due information is the only borrower-specific information available and an entity uses past due information to assess whether there has been a significant increase in credit risk since initial recognition in accordance with paragraph 5.5.11 of IFRS 9, the entity shall provide an analysis by past due payments on such financial assets.

B8J If an entity has measured expected credit losses on a collective basis, the entity may not be able to allocate the gross carrying amounts of individual financial assets or the credit risk exposures on loan commitments and financial guarantee contracts to credit risk rating levels that recognize expected credit losses for the entire term. In that case, an entity shall apply the requirement in paragraph 35M to those financial instruments that can be directly attributable to a credit risk rating and disclose separately the gross carrying amount of financial instruments for which lifetime ECLs have been measured at group basis.

Maximum exposure to credit risk (paragraph 36(a))

B9 Paragraphs 35K(a) and 36(a) require disclosure of the amount that best reflects the entity's maximum exposure to credit risk. For a financial asset, this is typically the gross carrying amount less:

(a) amounts offset in accordance with IAS 32; and

(b) impairment losses recognized in accordance with IAS 39.

B10 Activities that give rise to credit risk and the associated maximum exposure to credit risk include, but are not limited to:

(a) extending credit and loans to customers and placing deposits with other entities. In these cases, the maximum exposure to credit risk reflects the carrying amount of the related financial assets.

(b) entering into contracts that are derivatives, such as foreign exchange contracts, interest rate swaps and credit derivatives. In cases where the resulting asset is measured at fair value, the maximum exposure to credit risk at the end of the reporting period will be equal to the respective carrying amount of the asset;

(c) provision of financial guarantees. In this case, the maximum exposure to credit risk is represented by the maximum amount that the entity would be required to pay if the guarantee were to be discharged, and this amount could be significantly greater than the amount recognized as a liability;

(d) an undertaking to provide loans that is not revocable during the term of the contract or can only be revoked in the event of a material adverse change. If an entity that has entered into such a contractual obligation is unable to settle it on a net basis in cash or another financial instrument, then the maximum exposure to credit risk is represented by the full amount of the loan commitment held. This is due to the uncertainty as to whether the amount of the unclaimed part of the loan will be called in the future. This amount may be significantly greater than that recognized as a liability.

Disclosure of Quantitative Liquidity Risk (Paragraphs 34(a) and 39(a) and (b))

B10A In accordance with paragraph 34(a), an entity discloses summary quantitative data about its exposure to liquidity risk based on inside information provided to key management personnel. The organization shall explain how these data are determined. If an outflow of cash (or other financial asset) included in this data could occur:

(a) either much earlier than the time indicated in these data,

(b) or in amounts that differ materially from those disclosed in the data (for example, when information about a derivative instrument is included in the data on the assumption that it is settled on a net basis, but the counterparty to that instrument has the right to require settlement on a gross basis),

an entity shall disclose that fact and provide quantitative information that will enable users of its financial statements to assess the extent of that risk, unless that information is already included in an analysis of contractual maturities presented pursuant to the requirements in paragraph 39(a) or (b).

B11 In preparing a maturity analysis as required by paragraphs 39(a) and (b), an entity uses its judgment to determine the appropriate number of time slots. For example, an organization may determine that it is appropriate to allocate the following time slots:

(b) from one month to three months; (c) three months to one year; and

(d) from one to five years.

B11A In order to comply with the requirements in paragraph 39(a) and (b), an entity shall not separate an embedded derivative from a hybrid (combined) financial instrument. For such an instrument, an entity shall apply paragraph 39(a).

B11B Paragraph 39(b) requires an entity to disclose a quantitative analysis of maturities for derivative financial liabilities that shows the remaining contractual maturities if the contractual maturities are material to understanding the timing of the related cash flows. For example, this would be the case if:

(a) an interest rate swap with a remaining maturity of five years that is included in a cash flow hedge relationship of a floating rate financial asset or liability;

(b) all commitments made to provide loans.

B11C Paragraphs 39(a) and (b) require an entity to disclose a quantitative maturity analysis of financial liabilities that shows the remaining contractual maturities of certain financial liabilities. As part of this disclosure:

(a) When the counterparty has a choice of payment timing, the associated obligation is for the very first period in which the entity can be required to make payment. For example, financial liabilities that an entity may be required to repay on demand (for example, demand deposits) are included in the time frame with the shortest maturities.

(b) When an entity commits to making installment payments, each payment relates to the very first period in which the entity may be required to make that payment. For example, a commitment to provide a loan for the part relating to the unclaimed portion of that loan is included in the time interval containing the earliest date on which the relevant portion of the loan can be called.

(c) For entity-issued financial guarantee contracts, the maximum amount of the guarantee relates to the very first period in which the guarantee can be called.

B11D The contractual amounts disclosed as part of the maturity analysis in paragraph 39(a) and (b) are the contractual undiscounted cash flows, for example:

(a) gross lease liabilities (before deducting finance costs);

(b) prices quoted in forward contracts to purchase financial assets for cash;

(c) net interest rate swaps that pay floating rate/receive fixed rate interest and exchange net cash flows;

(d) the amounts required by the contract to be exchanged between the parties in a financial derivative (such as a currency swap) if the contract involves an exchange of gross cash flows; and

(e) gross loan commitments.

Such undiscounted cash flows differ from the corresponding amount in the statement of financial position because the amount shown in that statement is based on discounted cash flows. Where the amount payable is not a fixed amount, the amount disclosed is based on conditions existing at the end of the reporting period. For example, when the amount payable varies depending on changes in an index, the amount disclosed may be based on the level of that index at the end of the reporting period.

B11E Paragraph 39(c) requires an entity to describe how it manages the liquidity risk inherent in items that are quantitatively disclosed in accordance with the requirements in paragraph 39(a) and (b). An entity shall disclose maturity analyzes of financial assets it holds to manage liquidity risk (for example, marketable financial assets or financial assets from which the entity expects to receive cash to offset outflows from financial liabilities) if such information is required by users. an entity's financial statements to assess the nature and level of liquidity risk.

B11F Other factors that an entity might consider as part of the disclosures required by paragraph 39(c) include, but are not limited to:

(a) has the entity secured a leverage facility (for example, a guaranteed placement of unsecured short-term debt securities) or other lines of credit (for example, a standby facility) that it can use to maintain liquidity;

(b) whether the entity holds deposits with central banks to maintain liquidity;

(c) whether the organization's sources of funding are highly diverse;

(d) whether the entity has significant concentrations of liquidity risk across assets or funding sources;

(e) whether the entity has established internal control procedures and contingency plans in place to manage liquidity risk;

(f) whether the entity has instruments that provide for the possibility of early repayment (for example, in the event of a downgrade of the entity's credit rating);

(g) whether the entity has instruments that could require the provision of collateral (for example, a margin requirement for derivatives);

(h) whether the entity has instruments that allow it to choose whether to settle its financial liabilities in cash (or another financial asset) or its own shares; or

(i) whether the entity has instruments that are the subject of a master netting agreement.

B12 - B16 [Deleted]

Market risk - sensitivity analysis (paragraphs 40 and 41)

B17 Paragraph 40(a) requires an entity to provide a sensitivity analysis for each type of market risk to which it is exposed. In accordance with paragraph B3, an entity is free to decide how it aggregates information to show the big picture, without aggregating information with different characteristics, about its exposure to risks arising in significantly different economic environments. For example:

(a) an entity that trades in financial instruments may disclose this information separately for financial instruments held for trading and for financial instruments not held for trading;

(b) an entity would not combine information about its exposure to market risks arising in hyperinflationary regions with the same market risks arising in regions with very low inflation.

If an entity is exposed to only one type of market risk and in only one economic environment, it does not need to show disaggregated information.

B18 Paragraph 40(a) requires sensitivity analysis to show the effect on profit or loss and equity of reasonably possible changes in the relevant risk variable (for example, prevailing market interest rates, foreign exchange rates, equity or commodity prices) . For these purposes:

(a) Entities are not required to determine what profit or loss would be for a period if the associated risk variables were different. Instead, entities disclose the effect that such a change would have had on profit or loss and equity at the end of the reporting period, on the assumption that a reasonably possible change in the relevant risk variable occurred at the end of the reporting period and has been accounted for. when determining the exposure to risk that exists at a specified date. For example, if an entity has a floating rate liability at the end of the year, then that entity would need to disclose the effect that would be on profit or loss (i.e., the amount of interest expense) for the current year if the interest rates have changed by a reasonably possible amount.

(b) Entities are not required to disclose the effect on profit or loss and equity for each possible change in the relevant change in risk within a range of reasonably possible changes. It is enough to disclose the effect of those changes that are on the borders of this reasonably possible range.

B19 In deciding how much change in the relevant risk variable is reasonably possible, an entity shall consider the following:

(a) The conditions of the particular economic environment in which it operates. Reasonably possible changes should not include unlikely or "worst case" scenarios or "stress tests". In addition, if the rate of change of the underlying risk variable is constant, then the organization does not need to revisit the chosen reasonably possible change in the risk variable. For example, suppose the interest rate is 5 percent and the entity determines that interest rate fluctuations of +/-50 basis points are reasonably possible. The entity will disclose information about the effect that would be on profit or loss and equity if interest rates were reduced to 4.5 percent or increased to 5.5 percent. In the next period, interest rates rose to 5.5 percent. The Organization continues to believe that interest rates can fluctuate within +/-50 basis points (ie the rate of change of interest rates is constant). The entity will disclose information about the effect that would be on profit or loss and equity if interest rates were reduced to 5 percent or increased to 6 percent. The Organization will not need to revise its estimate that interest rates can reasonably fluctuate within +/-50 basis points unless there is evidence that interest rates have become significantly more volatile.

(b) The length of time for which she makes the estimate. A sensitivity analysis should show the effects of changes that are considered reasonably possible over the period up to the entity's next disclosure of the information, which would normally be in the entity's next annual reporting period.

B20 Paragraph 41 allows an entity to use a sensitivity analysis that captures relationships between risk variables, such as a cost risk analysis, if the entity uses that analysis to manage its financial risks. This approach is applied even if such a technique allows to estimate only potential losses and does not estimate potential profits. Such an entity could comply with the requirements of paragraph 41(a) by disclosing information about the version of the risk valuation model it uses (for example, whether it uses Monte Carlo simulations), an explanation of how the model works, and key assumptions (for example, holding period and level). Entities could also disclose information about the historical period of observation and the weights applied to observations within that period, as well as an explanation of how options are taken into account in the calculations and what volatility and correlation coefficients are used (or, alternatively, Monte Carlo probability distribution model).

B21 An entity shall present sensitivity analyzes for all of its business but may present different types of sensitivity analyzes for different classes of financial instruments.

Interest risk

B22 Interest rate risk arises on interest-bearing financial instruments recognized in the statement of financial position (for example, debt instruments purchased or issued) and on certain financial instruments that are not recognized in the statement of financial position (for example, certain loan commitments).

Currency risk

B23 Foreign exchange risk (or foreign exchange rate risk) arises from financial instruments denominated in a foreign currency, that is, a currency other than the functional currency in which they are measured. For the purposes of this IFRS, financial instruments that are non-monetary items or financial instruments denominated in functional currencies are considered to be free of currency risk.

B24 A sensitivity analysis is disclosed for each currency for which the entity has significant exposure.

Other price risk

B25 Other price risk arises from changes in financial instruments, for example, in the prices of commodities or equity instruments. Pursuant to paragraph 40, an entity may disclose information about the impact of a decline in a particular stock market index, commodity price, or some other risk variable. For example, if an entity issues residual value guarantees that are financial instruments, the entity discloses increases or decreases in the value of the assets covered by the guarantee.

B26 Two examples of financial instruments that involve equity price risk are (a) a holding of another entity's equity instruments and (b) an investment in a trust that in turn invests in equity instruments. Other examples are forward contracts and options to buy or sell a specified number of equity instruments, and swaps that are indexed to changes in share prices. The fair value of such financial instruments depends on changes in the market price of the underlying equity instruments.

B27 In accordance with paragraph 40(a), the sensitivity of profit or loss to changes (arising, for example, on instruments at fair value through profit or loss) is disclosed separately from the sensitivity of other comprehensive income to changes (arising from for example, in connection with investments in equity instruments for which changes in fair value are presented in other comprehensive income).

B28 Financial instruments that an entity classifies as equity instruments are not remeasured. The equity price risk associated with these financial instruments will not affect profit or loss or equity. Therefore, no sensitivity analysis is required.

Derecognition (paras. 42C - 42H)

Continuing involvement (paragraph 42C)

B29 For the purposes of the disclosures required by paragraphs 42E–42H, an entity's continuing involvement in a transferred financial asset is measured at the reporting entity level. For example, if a subsidiary transfers to a third party that is not a related party a financial asset in which the parent of that subsidiary has a continuing interest, the parent's involvement is disregarded by the subsidiary when measuring its continuing involvement in the transferred asset for disclosure purposes in its separate or stand-alone financial statements (that is, when that subsidiary is a reporting entity). However, a parent would take into account its own continuing involvement (or the continuing involvement of another member of its group) in the financial asset transferred by its subsidiary when determining whether it has a continuing involvement in the transferred asset for disclosure purposes in its consolidated financial statements. (that is, when the reporting entity is the group).

B30 An entity does not have a continuing involvement in a transferred financial asset if, as part of the transfer, it neither retains any contractual rights or obligations with respect to the transferred financial asset nor acquires any new contractual rights or obligations associated with the transferred financial asset. An entity has no continuing involvement in a transferred financial asset if it has neither an interest in future proceeds from the transferred financial asset nor an obligation under any circumstances to make future payments in respect of the transferred financial asset. The term "payment" in this context does not include cash flows received by an entity on a transferred financial asset that it is obligated to remit to the recipient of that asset.

B30A When transferring a financial asset, an entity may retain the right to service that financial asset for a fee, such as a service contract. An entity evaluates a servicing contract in accordance with the guidance in paragraphs 42C and B30 to determine, for purposes of meeting disclosure requirements, whether it has a continuing involvement in a financial asset as a result of that servicing contract. For example, for purposes of meeting disclosure requirements, the servicer has an ongoing involvement in the transferred financial asset if the servicing fee depends on the amount or timing of the cash flows from the transferred financial asset. Similarly, for purposes of meeting disclosure requirements, the servicer should be considered to have a continuing involvement in the transferred financial asset if the fixed consideration is not paid in full if the asset fails. In these examples, the servicer has an interest in the future performance of the transferred financial asset. This assessment is independent of whether the receivable is expected to be sufficient reimbursement for the service provided by the entity.

B31 Continuing involvement in a transferred financial asset may result from contractual provisions in an agreement to transfer the asset or from a separate agreement with the transferee of that asset or with a third party in connection with the transfer.

Transferred financial assets that are not derecognised in their entirety

B32 Paragraph 42D requires disclosure when all or part of a transferred financial asset does not qualify for derecognition. Such disclosures must be made at each reporting date that an entity continues to recognize transferred financial assets, regardless of when the transfer occurs.

Types of continuing involvement (paragraphs 42E–42H)

B33 Paragraphs 42E–42H require qualitative and quantitative disclosures for each type of continuing involvement in derecognised financial assets. An entity shall aggregate information about its ongoing involvement by type of involvement that is indicative of the entity's exposure to risk. For example, an entity may aggregate its continuing involvement by type of financial instrument (for example, guarantees or call options) or by type of transfer (for example, receivables factoring, securitization transactions, and securities lending).

Timing Analysis of Undiscounted Cash Outflows for the Repurchase of Transferred Assets (paragraph 42E(e))

B34 Paragraph 42E(e) requires an entity to disclose an analysis of the timing of the undiscounted cash outflow to repurchase derecognised financial assets or other amounts payable to the transferee of those financial assets in respect of those assets, indicating the remaining contractual timing of such continued involvement of the organization. This analysis distinguishes between cash flows that must be paid (for example, on forward contracts), cash flows that an entity may be required to pay (for example, on written put options), and cash flows that may be paid by an entity of its own choosing (for example, on purchased call options).

B35 In preparing the timing analysis required by paragraph 42E(e), an entity shall use its judgment to determine the appropriate number of time slots. For example, an organization may determine that it is appropriate to allocate the following time slots:

(a) within one month;

(b) from one month to three months;

(c) three months to six months;

(d) six months to one year;

(e) one to three years;

(f) three to five years; and

(g) more than five years later.

B36 If there is more than one possible timing of cash flows, the cash flows are included in a specific time interval based on the earliest date that an entity could be required or entitled to pay.

Qualitative information (paragraph 42E(f))

B37 The qualitative disclosures required by paragraph 42E(f) include a description of the derecognised financial assets and the nature and purpose of the entity's continuing involvement after the transfer of those assets. It also includes a description of the risks to which the organization is exposed, including:

(a) a description of how the entity manages the risk associated with its continued involvement in the derecognised financial assets;

(b) whether the entity is required to incur losses before other parties, and the ranking and amounts of losses borne by parties whose interests in the asset are of lesser precedence than the entity's interest (i.e., its continued involvement in the asset) ;

(c) a description of any factors that would cause the entity to provide financial support or repurchase the transferred financial asset.

Gain or loss on derecognition (paragraph 42G(a))

B38 Paragraph 42G(a) requires an entity to disclose derecognition gain or loss for financial assets in which the entity has a continuing involvement. An entity shall disclose whether a gain or loss occurred at the time of derecognition because the fair value of the components of the previously recognized asset (ie the derecognised interest in the asset and the entity’s retained interest) differed from the fair value of that asset previously of the recognized asset as a whole. In such a situation, an entity shall also disclose whether significant inputs were used in those fair value measurements that were not based on observable market data, as described in paragraph 27A.

Additional information (paragraph 42H)

B39 The disclosures required in paragraphs 42D–42G may not be sufficient to meet the disclosure objectives in paragraph 42B. In such a case, an entity shall disclose all additional information that is necessary to achieve the disclosure objectives. The organization should decide, on a case-by-case basis, how much additional information it needs to provide to meet the information needs of users and how much weight should be given to various aspects of the additional information. A balance needs to be found between overloading financial statements with unnecessary details that may not help users of financial statements, and obscuring the information as a result of overgeneralizing it.

Offsetting financial assets and financial liabilities (paragraphs 13A–13F)

Scope of application (paragraph 13A)

B40 The disclosures in paragraphs 13B–13E are required for all recognized financial instruments that have been offset in accordance with paragraph 42 of IAS 32. In addition, financial instruments are within the scope of the disclosure requirements in paragraph 13B - 13E if they are the subject of an enforceable master netting agreement or similar agreement covering similar financial instruments and transactions, whether or not those financial instruments are offset in accordance with paragraph 42 of IAS 32.

B41 The similar arrangements referred to in paragraphs 13A and B40 include derivatives clearing agreements, global master repurchase agreements, global master securities lending agreements, and related financial collateral rights. Similar financial instruments and transactions referred to in paragraph B40 include derivatives, repurchase agreements, reverse repurchase agreements, and securities lending and borrowing agreements. Examples of financial instruments that are not within the scope of paragraph 13A are loans and deposits from customers with the same financial institution (unless they are offset for the purposes of presentation in the statement of financial position) and financial instruments that are the subject of an agreement only. about providing.

Quantitative disclosures for recognized financial assets and recognized financial liabilities that are within the scope of paragraph 13A (paragraph 13C)

B42 Different requirements may apply to the measurement of financial instruments disclosed in accordance with paragraph 13C (for example, a repurchase agreement payable may be measured at amortized cost, while a derivative would be measured at fair value). An entity shall include instruments at their recognized amounts and describe the resulting measurement differences in related disclosures.

Disclosures about the gross amounts of recognized financial assets and recognized financial liabilities that are within the scope of paragraph 13A (paragraph 13C(a))

B43 The amounts required by paragraph 13C(a) relate to recognized financial instruments that have been offset in accordance with paragraph 42 of IAS 32. The amounts required by paragraph 13C(a) also relate to recognized financial instruments that are the subject of an enforceable master netting agreement or similar agreement, whether or not those instruments meet the offsetting criteria. However, the disclosure requirements in paragraph 13C(a) do not apply to amounts recognized as a result of collateral agreements that do not meet the offsetting criteria in paragraph 42 of IAS 32. Instead, such amounts are required to be disclosed in in accordance with paragraph 13C(d).

Disclosure of amounts offset in accordance with the criteria in paragraph 42 of IAS 32 (paragraph 13C(b))

B44 Paragraph 13C(b) requires entities to disclose the amounts that have been offset in accordance with paragraph 42 of IAS 32 in determining the net amounts presented in the statement of financial position. The amounts of recognized financial assets and recognized financial liabilities that are offset under the same arrangement will be disclosed both in the disclosures for financial assets and in the disclosures for financial liabilities. However, the amounts disclosed (for example, in a table) are limited to those amounts that are subject to offset. For example, an entity may have a recognized asset for derivatives and a recognized liability for derivatives that meet the offsetting criteria in paragraph 42 of IAS 32. If the gross of that derivative asset is greater than the gross of that derivative liability, then in the table, disclosures of financial assets will show the full amount of that derivative asset (in accordance with paragraph 13C(a)) and the total amount of that derivative liability (in accordance with paragraph 13C(b)). However, in the financial liability disclosure table, that derivative liability will be shown in full (in accordance with paragraph 13C(a)), while the corresponding derivative asset will be shown (in accordance with paragraph 13C(b)) in an amount equal to that derivative liability. .

Disclosure of Net Amounts Presented in the Statement of Financial Position (paragraph 13C(c))

B45 If an entity has instruments that are subject to the disclosure requirements (as described in paragraph 13A) but do not meet the offsetting criteria in paragraph 42 of IAS 32, the amounts required to be disclosed in paragraph 13C(c) , will be equal to the amounts required to be disclosed in accordance with paragraph 13C(a).

B46 For the amounts required to be disclosed in accordance with paragraph 13C(c), a reconciliation must be shown against the amounts presented in the relevant statement of financial position line items. For example, if an entity determines that aggregating or disaggregating the amounts presented for relevant financial statement line items provides more relevant information, the entity shall show a reconciliation of the aggregated or disaggregated amounts that it discloses in accordance with paragraph 13C(c) with the amounts presented for the relevant line items. about the financial situation.

Disclosures of financial instruments that are the subject of an enforceable master netting agreement or similar arrangement that are not subject to disclosure under paragraph 13C(b) (paragraph 13C(d))

B47 Paragraph 13C(d) requires entities to disclose amounts that are the subject of an enforceable master netting agreement or similar arrangement that is not subject to disclosure under paragraph 13C(b). Paragraph 13C(d)(i) applies to amounts associated with recognized financial instruments that do not meet some or all of the offsetting criteria in paragraph 42 of IAS 32 (for example, current rights to set off that do not meet the criteria in paragraph 42 of IAS 32). paragraph 42(b) of IAS 32, or conditional rights to set off, which are enforceable and enforceable only in the event of a default or only in the event of the insolvency or bankruptcy of any of the counterparties).

B48 Paragraph 13C(d)(ii) applies to amounts associated with financial collateral, including cash collateral, whether received or given. An entity shall disclose information about the fair value of those financial instruments that are pledged or received as collateral. The amounts disclosed in accordance with paragraph 13C(d)(ii) must reflect the collateral actually received or delivered by the entity, and not the related payables or receivables that have been recognized for a liability to return the collateral received or delivered by the entity.

Limitations on Amounts Disclosed under paragraph 13C(d) (Paragraph 13D)

B49 In disclosing the amounts required by paragraph 13C(d), an entity shall take into account the effect of excess collateral on a financial instrument basis. To do so, an entity must first reduce the amount disclosed in accordance with paragraph 13C(c) by the amounts disclosed in accordance with paragraph 13C(d)(i). The entity shall then limit the amounts disclosed in accordance with paragraph 13C(d)(ii) so that they do not exceed the remaining amount in paragraph 13C(c) for the relevant financial instrument. However, if rights to collateral may be extended to other financial instruments, such rights may be taken into account in the disclosures required by paragraph 13D.

Description of Setoff Rights Under Enforceable Master Netting Agreements or Similar Agreements (Paragraph 13E)

B50 An entity shall describe the types of set-off rights and similar arrangements disclosed in accordance with paragraph 13C(d), including the nature of those rights. For example, an organization should describe its conditional rights. For instruments for which there are non-futuristic offsetting rights, but those instruments do not meet the remaining criteria in paragraph 42 of IAS 32, an entity shall describe the reason(s) for which those criteria are not observed. For financial collateral received or provided, the entity shall describe the terms of the relevant collateral agreement (eg, the effect of restrictions on the collateral).

Disclosure by type of financial instrument or by counterparty

B51 The quantitative disclosures required by paragraphs 13C(a)–(e) may be grouped by type of financial instrument or transaction (for example, derivatives, repurchase and reverse repurchase agreements, or securities lending and receiving agreements).

B52 Alternatively, an entity may group the quantitative information required by paragraphs 13C(a)–(c) by type of financial instrument and group the quantitative information required by paragraphs 13C(c)–(e) by counterparty. If the required information is disclosed by an entity by counterparty, then the entity is not required to provide the name of the counterparties. However, for purposes of comparability, the entity's designation of counterparties (Contractor A, Contractor B, Contractor C, etc.) must remain consistent from year to year for all annual periods presented. Qualitative disclosures should also be considered to provide additional information about types of counterparties. When the amounts required in paragraphs 13C(c)–(e) are disclosed by counterparty, amounts that are individually significant relative to the total counterparties shall be separately disclosed, and amounts for the remaining counterparties that are not individually significant shall be disclosed in one aggregate line. .

Disclosure of other information

B53 The disclosures required by paragraphs 13C–13E are the minimum required. To achieve the objective in paragraph 13B, an entity may be required to disclose additional (qualitative) information, depending on the terms of the enforceable master netting agreements and related contracts, including a description of the nature of the stipulated offsetting rights and their effect or potential effect on the entity's financial position.