Showing posts with label IFRS. Show all posts
Showing posts with label IFRS. Show all posts
Letter from PRA on IFRS 9 ECL to Systemically Important banks
Friday, January 18, 2019
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ChartAcc.com - Victoria Saporta, Executive Director, Prudential Policy, Prudential Regulation Authority, recently sent a letter to major banks for disclosures on Expected Credit Loss under IFRS 9.
The letter was addressed on two concerns as follows:
- Measurement uncertainty and sensitivity:
- To enable and produce the quantitative information about that sensitivity internally
- To report quantitative measurement uncertainty and sensitivity information from their 2018 (or 2018/2019) annual reports and accounts
- The use of Monte Carlo approaches:
- Firms' concern was the difficult of using above mentioned approach
- PRA concluded that few other firms are using so all are expected to provide comprehensive and appropriately focused way and at an appropriate level of granularity.
The 7 banks were addressed this letter which are as follows:
Courtsey: PRA
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- Barclays plc,
- HSBC Holdings plc,
- Lloyds Banking Group plc,
- Nationwide Building Society,
- Santander UK plc,
- Standard Chartered PLC and
- The Royal Bank of Scotland Group plc.
Courtsey: PRA
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LIBOR, Definition and more...
Monday, September 26, 2011
Definition:
London Interbank Offered Rate (LIBOR, pronounced as “lie-bore”) is the rate at which European banks can borrow funds, in marketable size, from other banks in the London interbank market.
Usage:
It is the rate at which the world's "Most Preferred Borrowers" are able to borrow money.
It is also the rate on which rates for "Less Preferred Borrowers" are based.
e.g. a corporation with a very good credit rating may borrow money for one year at LIBOR plus four points.
It is also used as benchmark rate for financial instruments.
e.g. forward rate agreements, short term interest rate futures contract, interest rate or inflation swaps, currencies, variable rate mortgages and floating rate notes.
It is also used in most of the Financial Statements world-wide for quoting interest rate being charged on Related Party advances and borrowings.
Measure:
It's quoted in basis points, which, if divided by 100, becomes rate percentage.
e.g. 233 basis points over 1-year LIBOR means if LIBOR on 1-year loans is currently at 4.2% then the quoted loan rate for the customer will be 4.2% plus 2.33% i.e. 6.53%.
Calculation:
It is derived from:
Countries:
Canada, United States, Switzerland and United Kingdom rely on the LIBOR for a reference rate.
London Interbank Offered Rate (LIBOR, pronounced as “lie-bore”) is the rate at which European banks can borrow funds, in marketable size, from other banks in the London interbank market.
Usage:
It is the rate at which the world's "Most Preferred Borrowers" are able to borrow money.
It is also the rate on which rates for "Less Preferred Borrowers" are based.
e.g. a corporation with a very good credit rating may borrow money for one year at LIBOR plus four points.
It is also used as benchmark rate for financial instruments.
e.g. forward rate agreements, short term interest rate futures contract, interest rate or inflation swaps, currencies, variable rate mortgages and floating rate notes.
It is also used in most of the Financial Statements world-wide for quoting interest rate being charged on Related Party advances and borrowings.
Measure:
It's quoted in basis points, which, if divided by 100, becomes rate percentage.
e.g. 233 basis points over 1-year LIBOR means if LIBOR on 1-year loans is currently at 4.2% then the quoted loan rate for the customer will be 4.2% plus 2.33% i.e. 6.53%.
Calculation:
It is derived from:
- a filtered average
- of the world's most creditworthy banks' interbank deposit rates
- for larger loans with maturities between overnight and one full year.
Countries:
Canada, United States, Switzerland and United Kingdom rely on the LIBOR for a reference rate.
XBRL and more...
Saturday, January 1, 2011Hope the previous sharepoint on XBRL in layman's language was helpful in giving basic purpose of bringing XBRL to business.
Before going forward lemme again elaborate XBRL in short detail as follows:
MP3 files are music files in specific format which can be created and played on most devices or softwares.
Same way XBRL is a universal coding format for Financial Information which can be instantly and easily converted and shared in any country reporting format.
Now, lemme go on a bit "Definition-wise" side of XBRL...
- What?
- Why?
- How?
What is XBRL?
It's a coding language for sharing Financial Information in electronic form. It's like Extensible Markup Language (XML) where XML is for any type of data and XBRL is specifically for Financial Reporting.
e.g. Electronic data format of "Statement of Financial Position" from one software can't be uploaded in any other software unless coding for report is same for both.
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Why XBRL is required?
To furnish or compare, electronic data of Financial Information in easily readeable format. In some cases it will be compulsory to report under XBRL format for filing data with Govt. departments.
So it has following reasons of adoption:
- Efficiency in reporting and Time and Cost saving
- Legal requirement
e.g. U.S. Securities and Exchange Commission (SEC) rules require some Public companies to submit their financial statements in the XBRL interactive data format for the fiscal periods ending on or after 15 June 2009.
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How to use XBRL?
Third party softwares and utility tools are available to convert data from normal format to XBRL format. Even any existing accounting software can be modified or upgraded to produce XBRL reports.
e.g. XBRL programmers will usually provide technical support or guidance for those taking part in XBRL adoption.
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Wait for my next sharepoint to elaborate on followings:
How IFRS is related to XBRL?
How to Join XBRL?
What are Taxonomies and Jurisdictions?
What are the technicalities required thereof?
47) IFRS - Explain Fair value hierarchy for Financial Instruments...
Monday, May 10, 2010Hint
As per IFRS 7, Fair Valuation of Financial Instruments has following hierarchy:
- Level 1
- in Active Markets
- for identical assets or liabilities or instruments- Valued using Quoted Prices (unadjusted)
e.g. Listed instruments - Level 2
- Valued by reference to inputs that are observable:
> Direct (prices), or
> Indirect (derived from prices)
- other than quoted prices included within Level 1
e.g. derivatives such as interest rate swaps or forward currency contracts where inputs are mostly observable and OTC (Over-the-counter) securities - Level 3
- using inputs that are based on unobservable market data
- Valued by reference to valuation techniques
e.g. Unquoted private equity or venture capital holdings
- Levels
The levels in the fair value hierarchy into which the fair value measurements are categorised - Transfers (between Level 1 and 2)
- significant transfers between Level 1 and Level 2, if any, and
- the reasons for those transfers - Reconciliation (Level 3)
- a reconciliation for fair value measurements in Level 3
> from the beginning balances to the ending balances,
> highlighting purchases, sales, and gains and losses,
> identify transfers into or out of Level 3, and
- the reasons for such transfers.
Disclosure of fair values is not required (just information is quoted) in following cases:
- when the carrying value is reasonable approximation of fair value,
such as short-term trade receivables and payables, or - for instruments whose fair value cannot be measured reliably
46) IFRS - Tell me if "Profit and Loss account" is now "Income Statement" then what is Balance sheet and other related terms under IFRS.
Saturday, April 10, 2010Hint:
Under IFRS, some terms are redefined as follows:
- Profit and Loss Account = "Income Statement" or a "Statement of Comprehensive Income"
- Balance Sheet = "Statement of Financial Position"
- Cash Flow Statement = "Statement of Cash Flows"
- Stock = "Inventory"
- Debtors = "Receivables"
- Creditors = "Payables"
Other than above IFRS also requires followings:
- "Statement of Changes in Equity"
- Components of comprehensive income may not be presented in the statement of changes in equity
- Present all non-owner changes in equity (i.e., "Comprehensive income")
- either in one statement of comprehensive income or
- in two statements (a separate income statement and a statement of comprehensive income).
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