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AFA 2021 Lecture 9B Financial Instruments Disclosure
AFA 2021 Lecture 9B Financial Instruments Disclosure
2020 - 2021
Leo G. van der Tas
IFRS 7 – Summary
Two broad types of disclosure:
• significance of financial instruments for
financial position and performance
• explaining the numbers in the financial statements
• nature and extent of risks arising from
financial instruments
• what could happen to those numbers
• how that risk is managed
IFRS 7 – Explaining the risks
Qualitative disclosures
• For each type of risk arising from financial instruments
• exposures to risk and how they arise
• objectives, policies and processes for managing the risk
• including methods used to measure risk
• changes in the above from the previous period
IFRS 7 – Explaining the risks
• Quantitative disclosures
• summary data based on key management
information
• prescribed minimum disclosures for
• credit risk
• liquidity risk
• market risk
• foreign currency risk
• interest rate risk
• other, e.g. commodity or equity, price risk
• concentrations of risk
Credit risk (trade receivables)
7
Liquidity analysis DSM 2020 (cont’d)
IFRS 7 – Explaining market risk
• 9 • Disclose sensitivity analysis
• separately for each type of market risk (e.g. interest rate/FX)
• separately for each significant currency
• impact on P&L and equity of ‘reasonably possible’ changes
in risk variable
• normally one year time horizon
• disclose at extremes of range only
• based on year end position
• methods/assumptions and changes from previous year
Sensitivity currency
• 10
Sensitivity FX and interest rate risk
Philips Group, 2020
11