Are you looking for an accounting system in compliance with IFRS 9? If you are, then you will have to decide if you need a parallel or an adjustment accounting system or even a combination of both. We are aware of the pros and cons and have developed a solution for each method.
The valuation component covers all the functions necessary to implement the valuation requirements for initial and subsequent measurement as defined under IFRS 9. It contains several components that generate estimated cash flows while taking several types of information such as contractual data, market rate sources and customer payment behaviour into account for the prediction of the future cash flow plan.
The solution includes an accounting rules engine for multi-entity, multi-currency and multi-GAAP operations. A template with IFRS 9-compliant accounting logic and chart of accounts makes the solution ready to meet IFRS 9 requirements. The accounting logic and a standard chart of accounts, which can be customised by a simple mapping process during the project, are part of each delivery.
The ECL Workbench is a modular solution that calculates probability-weighted Expected Credit Losses (pwECL) in line with IFRS 9 requirements. This includes the calculation of 12-month pwECL with PD, LGD und EAD as well as lifetime pwECL for assets assigned to stage 1 or 2.
For financial assets with objective evidence of impairment, the Customer Impairment Workbench ensures that specific provision (SP) and lump-sum specific provision (LSSP) are dealt with in line with IFRS 9 requirements.
The Customer Impairment Workbench is a modular solution that covers all valuation and accounting requests linked to stage 3 impairment.
The aim of hedge accounting is to eliminate the net influence on the profit and loss account. Comprehensive regulations on hedge accounting are required due to the valuation concept in IAS 39 and IFRS 9, which values some financial instruments at fair value and some at amortised cost, and also due to the different effects on profit and loss. Some sections of IAS 39 were revised and extended in IFRS 9.
Changes to the definition of leases, which entail the separation off-balance-sheet service contracts, were made in IFRS 16. All leasing agreements, apart from low-value or short-term leases, have to be disclosed on a lessee’s balance sheet. A ‘right-of-use’ asset and the present value of the leasing liability are used for balance sheet disclosure. IFRS 16 regulates the processing of all expenses including items not covered by a leasing agreement, variable leasing instalments not based on index or interest rates as well as option rights.