entity acquires or originates the financial asset with a premium or discount on The business model test is the first of the two tests that determine the classification of a financial asset. Prior to joining CCA in 2007, Mr. Rana was a Managing Director of Old Lane, where he led negotiated investments in financial services businesses. underlying set of instruments that are creating the cash flows. Illustration: Modern Liquidity Management for Financial, Legal and Fiscal Purposes”. Earlier, he was a vice president at Harvard Management Company, responsible for information technology venture investments, and a consultant with McKinsey & Co. Perreault received a Bachelor of Science in mechanical engineering from Rensselaer Polytechnic Institute, summa cum laude, and a Masters of Business Administration from the Harvard Business School where he was a Baker Scholar. According to IFRS 9, When an entity first recognizes a financial asset, it classifies based on the entity’s business model for managing the asset and the asset’s contractual cash flow (SPPI test) characteristics, as further described below. Additionally, Kohlhagen’s contributions to the world of finance have been widely published in a number of economics and business publications and journals. IFRS 9 aligne davantage la comptabilité de couverture sur la gestion des risques de l’entreprise en contrepartie d’une information financière accrue. Instead, the entity must consider all relevant evidence that is asset contains a contractual term that could change the time or amount of In making this determination, an entity must Today, he continues to help companies solve complex business issues as a technology innovator and an international author and speaker. flow characteristic is not genuine if it affects the instrument's contractual It would be better if some numerical illustration is provided. Under IAS 39, it can be quite challenging at times to compare the accounting treatment for the same type of financial instruments as it can be classified in various ways. IFRS 9 is in force as at 1 January 2018. The session discusses the examples of using the amortised cost concept Mr. Pettinato holds a Bachelor of Science degree in Computer Science from Syracuse University and an MBA with honors from Baruch College’s Zicklin School of Business. Mr. Pettinato has more than 25 years of experience managing and developing technology solutions for treasury, trading, risk management, accounting and post-trade processing of derivatives and capital markets products. Brad Waugh was the President and Chief Executive Officer of Tunstall Americas, a world leading provider of telehealthcare solutions. consider the potential effect of the contractual cash flow characteristic at There, his visionary technology product won him recognition as an early pioneer of software development for mobile handheld devices. This site uses cookies to improve your experience. For example, banks may need to revisit their ALM policies/strategies and consider impact to IFRS 9. amortized cost (or FVOCI as the case may be) if: the contractual cash flow characteristic does not affect the classification of the If a financial On the day to day, Alexander values teamwork, but also stresses the importance of individual responsibilities and contributions because he believes that success comes from the combination of all three. Mr. Ewing holds a Bachelor of Arts degree in Economics, magna cum laude, from Yale University and an MBA from Stanford University. :- An At Lazard, Mr. Rana was responsible for equity and debt investments in financial- and related business, as well as information services investments. His senior roles also include President & CEO of DACG, a NASDAQ-listed global consulting group, for which he raised $5 million in private equity; and Group Director and Senior Vice President at Equifax in Europe, where he led sales, marketing and M&A with over a thousand direct reports. What began as a small team with 2 direct reports rapidly grew into a 10-person team. Purpose of this document 1 Classification and measurement 2. IFRS 9 establishes principles for the financial reporting of financial assets and financial liabilities. There he was part of the senior team that helped to grow the company to become the leader in its market segment and take the company public on NASDAQ. Such relevant evidence includes, but business model can be to hold financial assets to collect contractual cash Prior to joining Commonwealth, Perreault was COO and later CEO of Object Design, a publicly held software company. is not limited to: - Although the objective of an entity’s business model may be to flows that could arise during the life of the instrument due to that contractual Dr. Kohlhagen was also honored as an inaugural member of Risk Magazine’s first “Derivatives Hall of Fame” in 2002. With over 20 years of establishing and reshaping global HR departments, Ms. Behncke Colyer brings a strong track record of aligning business practices with corporate goals, strategies, and values. highly unlikely. Under IFRS 9, IASB has taken a more simplified approach by reducing the classification to two categories:  amortized cost or fair value. the accrued (but not paid) contractual interest, which may include reasonable September 2017. Weismann began his career with Peat, Marwick, Mitchell (now KPMG) in both audit and consulting groups and was licensed as a CPA in Massachusetts. or securitization will be accounted for as a sale or a financing. His thought leadership extends across treasury management to derivative reform and accounting regulations under both FASB and IASB. He holds a Bachelor of Arts in Economics from Saint Joseph’s University. IFRS 9 was released in 2014. In 1984 Willibald established ecosoft in Vienna. At Thomson Reuters, he was involved in the acquisition of Selkirk Technologies, a Vancouver-based provider of treasury products and services. Reynaldo Prior to Phase Forward, Weismann was CFO for four northern California-based software companies including Inxight Software, a private text search engine company, Kabira Technologies a private communications software company, NONSTOP Solutions, a private inventory management software company and Forte Software, a public application development tools company, where he led the IPO in 1996. They see new opportunities and readily take action, even on the toughest challenges. entity’s business model for managing financial assets is a matter of fact and Learn more Accept. John Mitchell heads up Reval’s Global Sales organization, where he is building a world-class, high-performance sales team focused on industry-leading growth. IFRS 9 generally is effective for years beginning on or after January 1, 2018, with earlier adoption permitted. In addition to Reval’s Board, Dr. Kohlhagen sits on the Board of Directors of Ametek, Inc. a leading global manufacturer of electronic instruments and electromechanical devices; Abtech Holdings, Inc., a developer and manufacturer of environmental technologies; and Freddie Mac, established by Congress to provide liquidity, stability and affordability to the U.S. residential mortgage markets. The derecognition model in IFRS 9 is carried over unchanged from IAS 39 and is therefore not considered further in this paper. cash flows of the financial asset. financial asset meets the contractual cash flow condition but does not do so Mr. Brimfield graduated from the University of Rochester with Bachelor of Arts degrees in Economics and Political Science. Each tranche has a subordination He has focused his investment activity in the Northeast since establishing Hambro’s office there in 1982. He also worked as a Vice President at Chemical Bank and at First Pennsylvania Bank. on. If an instrument fails to meet both criteria, then the financial asset should be measured at fair value. collecting prepay a debt instrument before maturity is eligible to be measured at In the first case, contractual cash He said the dynamics of the Professional Services team has changed over the past year. Extending his advocacy beyond the corporate environment to the communities they serve, Mr. Okochi leads his company’s corporate responsibility program, Reval Cares, and sits on the boards of the non-profit organizations, Little Kids Rock and Be The Match®, a National Marrow Donor Program®. •       A cash In addition to his responsibilities as Managing Director, Mr. Rieder also acts as an expert speaker at the Research Institute for Banking at the Johannes Kepler University Linz, and is co-author of the book “Cash Pooling. An entity can classify an instrument at amortized cost if contractual cash flows are solely payments of principal and interest and if the business model is to hold instruments to collect contractual cash flows (‘business model test’). While it isn’t possible to learn how to be jolly, Rey has some excellent advice to those new to implementation consulting. . the related assets under the Business Model test may depend on whether the factoring At Bankers Trust, he was founder of the Market Transaction Group (Derivatives Options Products) and Managing Director, Money Market Sales and Trading, Origination and Distribution. After joining in 2007, Aayushi watched Reval’s India entity grow from 10-15 employees to over 100 employees. Thus an entity’s As explained in the June edition of Business Edge, the classification decision for non-equity financial assets under IFRS 9, is dependent on two key criteria: The business model within which the asset is held (the business model test), and The contractual cash flows of the asset (the SPPI test). Waugh was awarded the 2004 Technology Award for Entrepreneurship from the Entrepreneurship Forum of New England. A business model refers to how an entity manages its financial assets in order to generate cash flows. Manu Rana is a Managing Director and a Co-Head of Financial Partners at Napier Park Global Capital (“Napier Park”). •       A Kirsten Behncke Colyer is Executive Vice President, Chief Human Resources Officer at Reval, where she oversees and guides Human Resources and Administration globally. If the In some For banks and other companies with significant financial assets, this would be a major exercise and it would require a robust system of monitoring these assets going forward. Waugh has over 25 years of experience in building and leading entrepreneurial ventures. Contents. Our experts are known for looking at problems in new ways and for doing things beyond traditional ways. Prior to joining Reval in 2000, Mr. Ewing was Chief Financial Officer of HealthFirst, Inc., where he was responsible for business planning, financial reporting, and medical risk management. A cash Justin Perreault is a General Partner of Commonwealth Capital Ventures. Business Model IFRS 9 regulations require financial instru- ments to be allocated to one of three business models. Prior to that he was President and Chief Executive Officer of NaviNet, a leader in unified patient information management (UPIM). As explained in the June edition of Business Edge, the classification decision for non-equity financial assets under IFRS 9 is dependent on two key criteria: 1. the Bringing 25 years of experience to bear on vision to transform the way companies manage treasury and risk, Mr. Okochi led Reval through two market-changing acquisitions. Paying attention to detail, we build and deliver solutions that exceed internal and external expectations. From 1980 to 1983 he was Managing Director of Polydata GmbH in Munich. after the change and also evaluating contingent events, if any. La norme IFRS 9 entraîne trois modifications majeures. IFRS 9 also retains the option for some liabilities, which would normally be measured at amortised cost to be measured at FVTPL if, in doing so, it eliminates or reduces an accounting mismatch, sometimes referred to as ‘the fair value option’. The approach appears simpler, but it does present some new challenges, particularly for those organizations with large and/or complex portfolios. IFRS 9 (2014) consolidates all the previous three versions of IFRS 9 with some amendments and concludes all the three phases of the IASB’s project to replace IAS 39 in entirety. IFRS 9 and IAS 39 are two most important accounting standards for corporate treasurers because they address how to account for financial instruments, or how they are measured on an ongoing basis. Most recently, he served as SVP & CFO for Phase Forward, a public provider of data management solutions for clinical trials and drug safety and recently acquired by Oracle. He joined Reval after nearly a decade at EXIS Consulting, Inc., a leading financial software provider of fixed income trading systems, where he headed product development and operations. 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