IFRS 9 ECL

Lux Actuaries assists with the application of the requirements for financial instruments under IFRS 9 which covers classification and measurement, impairments, and hedge accounting for financial instruments, for banks, lending institutions and corporates.

Under IFRS 9, a principles-based approach is used to classify financial instruments and determine how these should be measured on an ongoing basis e.g. at amortised cost, fair value through other comprehensive income (FVOCI) or fair value through profit or loss (FVTPL).

IFRS 9 also introduces new requirements for impairments of financial assets using an expected credit loss (ECL) model instead of the incurred loss model required under IAS 39. Under IFRS 9, entities must allow for future losses, even if no loss event has yet occurred. This involves calculating an unbiased, probability-weighted estimate of expected credit losses under a range of scenarios while incorporating reasonable and supportable information on past events as well as current and future macroeconomic conditions. A simplified approach is used for certain assets including trade receivables where there is no significant financing component.

We assist with:

• development of impairment models
• independent validation of impairment models
• valuation of financial instruments subject to measurement at fair value (e.g. unlisted equity investments)
• advice and training on IFRS 9 requirements

ECL on Trade Receivables

We also offer an out-of-the-box solution for calculating expected credit losses (ECL) on Trade Receivables for corporates. This is a quick and painless and professional way for non-financial companies to take care of the burden of impairment calculations for IFRS 9, by professionals who are trained to understand risk and uncertainty.

By submitting your historic sales and receipts data or aging reports into our valuation model, combined with suitable macroeconomic data, we generate a report ready for use by your auditors for preparing your financial statements.

Please contact us for more information.