International Financial Reporting Standard 7

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The International Financial Reporting Standard 7 - Financial Instruments: Disclosures ( IFRS 7 ) is an accounting regulation of the IASB . The international accounting standard ( IFRS ) of the International Accounting Standards Board (IASB) regulates the presentation of financial instruments (mainly) in the notes (annual financial statements) . The presentation of financial instruments (classification) is regulated in International Accounting Standard 32 . The approach and valuation of financial instruments is the subject of International Accounting Standard 39 .

IFRS 7 regulates the information on financial instruments and applies both to those financial instruments that are to be recognized in the balance sheet in accordance with IAS 39 and to those that do not meet the recognition criteria (e.g. receivables that have already been written off).

purpose

The aim of IFRS 7 is to provide the addressees of the annual financial statements with information relevant to decision- making about the significance of financial instruments for the asset, profit and financial position of reporting companies as well as the risks emanating from the financial instruments and their handling ( risk management ).

Development, application and scope of IFRS 7

IFRS 7 was published on August 18, 2005 by the IASB . It summarizes the general regulations previously contained in IAS 32 as well as the industry-specific regulations of the no longer valid IAS 30 on disclosures about financial instruments in the financial statements. It must be applied by all companies to all types of financial instruments for fiscal years beginning on or after January 1, 2007. However, interests in subsidiaries or similar, pension plans for employees, insurance contracts and share-based payments do not fall within the scope of IFRS 7, as the presentation of these matters is regulated in other standards.

Regulations

Class formation:

IFRS 7 requires the grouping of financial instruments according to certain characteristics into financial instrument classes, which should be reconcilable to balance sheet items, and to which a number of disclosure requirements refer.

Information on the balance sheet:

  • Book values ​​per financial instrument class
  • Extensive information on financial instruments that are measured at fair value through profit or loss in accordance with the fair value option
  • Information on financial instruments that have been assigned to a different valuation category (reclassification)
  • Information on financial instruments that were transferred to others without being derecognized (derecognition)
  • Information on collateral provided and received
  • Information on the development of value adjustment accounts for default risks
  • Information on combined financial instruments with many embedded derivatives
  • Disclosures when a company is unable to meet its own loan obligations

Information on the income statement and equity:

  • Presentation of net profits and losses from financial instruments, broken down according to valuation categories
  • Total interest income and total interest expenses
  • Commission expenses and income
  • Interest income from impaired financial instruments
  • Expenses from impairment of financial instruments, broken down by class

Other information:

  • Information on the accounting and valuation methods used
  • Information on accounting for hedging transactions
  • Information on the fair values ​​(comparison of book values ​​and fair values, determination methods)

Information on risks from financial instruments and their handling (risk management):

  • Qualitative information: Description of the type and origin of the existing risks as well as the risk management, including changes compared to the previous period
  • Quantitative information: extent of risk per type of risk, in particular for default risks, liquidity risks and market price risks (sensitivity or value at risk ) as well as risk concentrations

See also

literature

  • Daniel Retzer: Effects of the changes to IAS 39 and IFRS 7 on the mapping of financial instruments in the context of IFRS accounting . Diplomica Verlag, 2010, ISBN 978-3836685221
  • Henning Zülch, u. a .: IFRS 7 - Disclosures on Financial Instruments: Comments, Best Practice and Checklists . 1st edition. Wiley-VCH Verlag, Weinheim 2010, ISBN 978-3527505470

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