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 The Course Objectives are to equip participants with adequate knowledge
on IFRS in T24 by
1. Introducing the participants to IFRS and the T24 IFRS module
2. Learning about Multi GAAP reporting
3. Learning about Classification of Financial Assets and Financial
Liabilities
4. Learning about Measurement of Financial Assets and Financial
Liabilities using Amortised Cost and Fair Value accounting
5. Learning to set up parameter tables connected with the module
6. Learning about linkages with T24 Accounting and Reporting
7. Learning to generate reports which are IFRS compliant

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 8. To understand what impairment is and how it is configured and
processed

9. What and how contracts can be reclassified

10. How collateral is allocated

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 International Financial Reporting Standards (IFRS) are issued by the
International Accounting Standards Board (IASB), which is the successor entity
to the International Accounting Standards Committee, formed in 1973. It is an
independent standard-setting board, overseen by a geographically and
professionally diverse body of trustees, publicly accountable to a Monitoring
Board of capital market authorities. It is being supported by an external
Standards Advisory Council (SAC) and an interpretations committee (IFRIC) to
offer guidance where divergence in practice occurs.
The goal of the IASC Foundation and the IASB is to develop a single set of
high-quality global accounting standards, in the public interest. In pursuit of this
goal, IASB works in close cooperation with stakeholders around the world,
including investors, national standard-setters, regulators, auditors, academics,
and others who have an interest in the development of high-quality global
standards.
Standards issued prior to 2001 retain the designation as IAS (International
Accounting Standard) and those after 2001 are designated as IFRS (International
Financial Reporting Standard). Collectively, the standards are referred to as
IFRS.
Introduction of IFRS accounting standards has a significant impact on the way in
which financial institutions are required to prepare and submit their financial
statements.
For TEMENOS T24 this requires a significant change in the way in which we
classify and account for different financial instruments and on our capability to
produce financial reports based on multiple accounting and reporting standards.

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 IFRS stands for International Financial Reporting Standards.
IFRS is a set of International Accounting and Reporting Standards stating
how financial assets and financial liabilities should be reported in
financial statements.
At present there 9 International Financial Reporting Standards.
 IFRS 1 – First time Adoption of International Financial Reporting
Standards
 IFRS 2 – Share-based payments
 IFRS 3 – Business combinations
 IFRS 4 – Insurance Contracts
 IFRS 5 - Non Current Assets held for sale and Discontinued
operations
 IFRS 6 – Exploration for and evaluation of Mineral Resources
 IFRS 7 – Financial Instruments – Disclosures
 IFRS 8 – Operating Segments
 IFRS 9 – Financial Instruments (to be finalised by the IASB and
will replace IAS39)
IFRS 7 is currently applicable to all banks (in compliance with IAS 39)

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 IFRS financial statements comprises
 a Statement of Financial Position
 a Comprehensive Income statement
 either a statement of changes in equity (SOCE) or a statement of recognised
income or expense ("SORIE")
 a statement of Cash flows
 notes, including a summary of the significant accounting policies
On 6 September 2007, the IASB issued a revised IAS 1 Presentation of Financial
Statements. The main changes from the previous version are to require that an
entity must:
 present all non-owner changes in equity (that is, 'comprehensive income' )
either in one statement of comprehensive income or in two statements (a
separate income statement and a statement of comprehensive income).
Components of comprehensive income may not be presented in the
statement of changes in equity.
 present a statement of financial position (balance sheet) as at the beginning
of the earliest comparative period in a complete set of financial statements
when the entity applies an accounting.
 balance sheet' will become 'statement of financial position‘.
 ‘income statement' will become 'statement of comprehensive
income‘.
 'cash flow statement' will become 'statement of cash flows'.

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 IFRS is aimed
To standardise accounting methods and procedures
To lay down principles for preparation and presentation
To establish benchmark for evaluating the quality of financial statements
prepared by the enterprise
To ensure users of financial statements get creditable financial
information
To attain international levels in the related areas

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 Impact of IFRS:
IFRS implementation affects several areas of business entity – like
Presentation of accounts
Accounting policies and procedures
Legal documentation
Looking at the value of financial assets and financial liabilities
The way the entity’s business is conducted

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 As the work of the IASC Foundation has gained growing acceptance and
its standards have been adopted by increasing numbers of national
jurisdictions, there has been a commensurate interest in its activities.
More than 100 countries now require or permit the use of IFRSs or are
converging with the International Accounting Standards Board's
(IASB) standards.
The picture shows the level of IFRS adoption at present.
Blue areas indicate countries that require or permit IFRSs.
Grey areas are countries seeking convergence with the International
Accounting Standards Board (IASB) or pursuing adoption of IFRSs.

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 The financial position of an enterprise is primarily provided in the Statement of
Financial Position. The elements of Financial Statements are:
An asset is a resource controlled by the enterprise as a result of past events.
Future economic benefits are expected to flow to the enterprise from the asset.
A liability is a present obligation of the enterprise arising from the past events.
Settlement of a liability is expected to result in an outflow from the enterprise'
resources, i.e.., assets.
Equity is the residual interest in the assets of the enterprise after deducting all
liabilities. It is also known as owner's equity.
The financial performance of an enterprise is primarily provided in an income
statement or profit and loss account. The elements of an income statement or the
elements that measure the financial performance are as follows:
Revenue is termed as increase in economic benefit during an accounting period.
The increase is in the form of inflows or enhancements of assets, or decrease of
liabilities that result in increases in equity. However, it does not include the
contributions made by the equity participants, i.e.., proprietor, partners and
shareholders.
Expenses are decreases in economic benefits during an accounting period in the
form of outflows, or depletions of assets or incurrence of liabilities that result in
decreases in equity.

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 A financial instrument is any contract that gives rise to a financial asset
of one entity and a financial liability or equity instrument of another
entity.

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 A financial asset is any asset that is:
(a) cash;
(b)an equity instrument of another entity or
(c)a contractual right
(i) to receive cash or another financial asset from another
entity; or
(ii) to exchange financial assets or financial liabilities with
another entity under conditions that are potentially favorable to the entity;
or
(d) a contract that will or may be settled in the entity’s own equity
instruments and is:
(i) a non-derivative for which the entity is or may be obliged
to receive a variable number of the entity’s own equity instruments; or
(ii) a derivative that will or may be settled other than by
exchange of a fixed amount of cash or another financial asset for a fixed
number of the entity’s own equity instruments.

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 A financial liability is any liability that is:
(a) a contractual obligation
(i) to deliver cash or another financial asset to another entity;
or
(ii) to exchange financial assets or financial liabilities with another
entity under conditions that are potentially unfavorable to the entity or
(b) a contract that will or may be settled in the entity’s own equity
instruments and is:
(i) a non-derivative for which the entity is or may be obliged to deliver
a variable number of the entity’s own equity instruments; or
(ii) a derivative that will or may be settled other than by the exchange
of a fixed amount of cash or another financial asset for a fixed number of
the entity’s own equity instruments.

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 An equity instrument is any contract that evidences a residual interest in
the assets of an entity after deducting all of its liabilities.

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 A derivative is a financial instrument or other contract within the scope
of IFRS 7 (IAS 39) with all three of the following characteristics:
(a) its value changes in response to the change in a specified interest rate,
financial instrument price, commodity price, foreign exchange rate,
index of prices or rates, credit rating or credit index, or other variable,
provided in the case of a non-financial variable that the variable is not
specific to a party to the contract (sometimes called the ‘underlying’);
(b) it requires no initial net investment or an initial net investment that is
smaller than would be required for other types of contracts that would
be expected to have a similar response to changes in market factors;
and
(c) it is settled at a future date.

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 In response to the ever increasing complexity and globalisation of
financial markets, International Accounting Standards Board (IASB) has
issued new standards to address the accounting of financial instruments.
The most progressive of these standards is IAS-39. The aim of the
standard is to recognise all the financial assets and liabilities on the
balance sheet (including derivatives that may have previously been held
off balance sheet), and move closer to full fair value accounting for these
assets and liabilities.
IAS - 39 is a standardised set of rules for the accounting and reporting of
financial assets and liabilities. It is being introduced as a global standard
with the recognised and announced aim to:
1) Replace the various local GAAP regulations
2) Provide clarity and confidence for investors
3) Evaluate the true financial risk of a company

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 In broad terms IAS-39 can be broken down into three elements:
1) Classification, Initial Measurement & Recognition of assets and
liabilities
2) Subsequent Measurement (including re-classification)
3) Impairment and Hedge Accounting

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 T24 supports the following functionality in the IFRS module

 Multi-GAAP reporting
 The classification of financial assets and financial liabilities
 Initial Measurement and recognition of financial assets and financial
liabilities in the books of accounts.
 Subsequent measurement based on the classification over the
contractual period by measuring them either at:
 Amortised Cost, or
 Fair Value
 Impairment Accounting
 Re-classification of financial assets and financial liabilities

Future Development: Subject to rules being finalised by IASB.

Hedge Accounting
Compliance in line with IFRS-9.

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 Before Development:
 Support to only GAAP types –TR & IA
Where IA related entries were getting generated, two ECB (i.e
EB.CONTRACT.BALANCES) records – had performance related issues.
 Report generation per GAAP type was bit messy.
 Lines with ‘0’ balance were suppressed in the GL report.
After Development:
 Support to GAAP types – TR, IA & IF.
Over and above the three GAAP types user can define their own types
based on the country’s local regulations.
Report generation will include the GAAP types as per the user’s
requirement.
Only one ECB record per contract/account – which will resolve the
performance related issues.

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 The following tables are required to cater with the Multi-GAAP setup:
FX.POS.TYPE defines the GAAP types:
 PL prefixes for CPL keys defined here
 PL Cont Code for Contingent Entries
 PL Self Bal for Self balancing entries.

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 CATEGORY - Defines GAAP type for internal accounts.
In CATEGORY table, POSITION.TYPE Field should be made inputtable
only for the range of categories between 10000 to 19999, which will be
used for creating internal accounts.
If the POSITION.TYPE is not defined in CATEGORY record, ‘TR’ will
be defaulted.
For the existing CATEGORY records, POSITION.TYPE Field should be
allowed to be changed from null to a value, provided there is no internal
account with the same category. If not null it should not be allowed to be
changed.

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 RE.STAT.REPORT.HEAD defines position types that needs to be filtered
into a report. Line definitions can be common between reports.
In RE.STAT.REPORT.HEAD, a new field INCL.GAAP.TYPE has been
introduced. It is forming a multi-value set in order to define different
GAAP types to it. INCL.GAAP.TYPE Field will accept a valid record
from FX.POS.TYPE.

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 FUNDS.TRANSFER (FT) & DATA.CAPTURE (DC) applications can be
used to raise the entries for different GAAP types as per the requirement
of the bank.
With respect to IFRS module, the entries will be always raised with the
Position Type as ‘IF’.
IA module can also be used to raise entries for different GAAP types
along with the existing ‘IA’ Position Type based on the set-up in
IAS.PRODUCT.GROUP.

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 Multi-GAAP processing and reporting depends on:
1) Position Type of the entry
2) Updation of the EB.CONTRACT.BALANCES record and
3) Updation of CAL & CPL
POSITION.TYPE
 On the entry will determine the GAAP type
 Positions and revaluation can be bifurcated by the GAAP type
 EB.SYSTEM.SUMMARY and TRANS.JOURNAL produced
per GAAP TYPE
EB.CONTRACT.BALANCES
 One record exists for every contract even for multiple GAAP
 Asset types for ‘non TR’ GAAP identified and stored on the
ASSET.TYPE Field. Eg: IF*51000

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 CAL and CPL
Different records created based on the GAAP types
All ‘GAAP’ consol keys part of the RE.STAT.LINE.CONT
Report printing filters ‘relevant’ GAAPs

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 CAL and CPL
Different records created based on the GAAP types
All ‘GAAP’ consol keys part of the RE.STAT.LINE.CONT
Report printing filters ‘relevant’ GAAPs

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 IA module in T24 is used to do the International Accounting Standards
(IAS) accounting. This module has a flexible accounting framework
which allows the users to generate the accounting entries. It also allows
accounting entries to be raised with different GAAP types, which are
identified by the position type in the entry.
IFRS Module in T24 is aimed at providing IFRS compliant accounting as
a standard to the T24 products. It is intended to provide the following
main functionality through the existing T24 applications:
 Ability to classify assets and liabilities according to IFRS
standards
 Ability to recognise profit and loss through Amortised Cost
 Ability to recognise profit and loss using Fair Value
 Ability to produce disclosure values of the contracts
 Ability to run multiple accounting GAAPs
 Ability to impair and reclassify IFRS contracts
IFRS needs contracts to be reported on Amortised Cost or Fair Value
depending on their classification. To calculate these values, it is essential
to determine the cash flows for a contract.
IFRS Module in T24 caters to this requirement and helps generate IFRS
compliant reporting.
IFRS requirements were hitherto defined in IAS 39 of International

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 Accounting Standards.

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 Financial Assets can be classified in to four categories:
 Held for Trading or Fair Value through profit or loss
 Held-to-Maturity
 Loans & Receivables
 Available for Sale or Fair Value through equity

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 Financial Liabilities can be classified in to two categories:
 Held for Trading or Fair Value through profit or loss
 Other Liabilities

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 A financial asset or financial liability at fair value through profit or loss is a
financial asset or financial liability that meets either of the following conditions:
(a) It is classified as held for trading. A financial asset or financial liability is
classified as held for trading if:
(i) it is acquired or incurred principally for the purpose of selling or
repurchasing it in the near term;
(ii) on initial recognition it is part of a portfolio of identified financial
instruments that are managed together and for which there is
evidence of a recent actual pattern of short-term profit-taking; or
(iii) it is a derivative (except for a derivative that is a financial guarantee
contract or a designated and effective hedging instrument).
(b) Upon initial recognition it is designated by the entity as at fair value through
profit or loss. An entity may use this designation only when permitted by
paragraph 11A, or when doing so results in more relevant information,
because either
(i) it eliminates or significantly reduces a measurement or recognition
inconsistency (sometimes referred to as ‘an accounting mismatch’)
that would otherwise arise from measuring assets or liabilities or
recognising the gains and losses on them on different bases; or
(ii) a group of financial assets, financial liabilities or both is managed
and its performance is evaluated on a fair value basis, in accordance

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 with a documented risk management or investment strategy, and information
about the group is provided internally on that basis to the entity’s key
management personnel (as defined in IAS 24 Related Party Disclosures (as
revised in 2003)), for example the entity’s board of directors and chief executive
officer.

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 Held-to-maturity investments are non-derivative financial assets with
fixed or determinable payments and fixed maturity that an entity has the
positive intention and ability to hold to maturity other than:
(a) those that the entity upon initial recognition designates as at fair value
through profit or loss;
(b) those that the entity designates as available for sale; and
(c) those that meet the definition of loans and receivables.
An entity shall not classify any financial assets as held to maturity if the
entity has, during the current financial year or during the two preceding
financial years, sold or reclassified more than an insignificant amount of
held-to-maturity investments before maturity (more than insignificant in
relation to the total amount of held-to-maturity investments) other than
sales or reclassifications that:
(i) are so close to maturity or the financial asset’s call date (for
example, less than three months before maturity) that changes in
the market rate of interest would not have a significant effect on
the financial asset’s fair value;
(ii) occur after the entity has collected substantially all of the financial
asset’s original principal through scheduled payments or
prepayments; or

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 (iii) are attributable to an isolated event that is beyond the entity’s control, is non-
recurring and could not have been reasonably anticipated by the Entity.

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 Loans and receivables are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market other than:
(a) those that the entity intends to sell immediately or in the near term,
which shall be classified as held for trading, and those that the entity
upon initial recognition designates as at fair value through profit or
loss;
(b) those that the entity upon initial recognition designates as available
for sale; or
(c) those for which the holder may not recover substantially all of its
initial investment, other than because of credit deterioration, which
shall be classified as available for sale.
An interest acquired in a pool of assets that are not loans or receivables
(for example, an interest in a mutual fund or a similar fund) is not a loan
or receivable.

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 Available-for-sale financial assets are those non-derivative financial
assets that are designated on initial recognition as potentially tradable but
which are not specifically acquired for short-term profit-making
(available for sale) or are not classified as:
(a) loans and receivables,
(b) held-to-maturity investments or
(c) financial assets at fair value through profit or loss.
They are measured at fair value, and reported in equity until the asset is
sold. When a financial asset is derecognised, the cumulative gain or loss
previously recognised in Equity is transferred to Profit and Loss.
However, interest (including any premium or discount) is recognised in
Income on an effective yield basis. Dividends on Equity instruments are
recognised in Profit and Loss.

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 IAS - 39 requires recognition of a financial asset or liability only when
the entity becomes a party to the contractual provisions of the instrument.
Purchase or sale of financial assets is recognised and derecognised using
either trade date or settlement date accounting. Method used is to be
applied consistently for all the purchases and sales of financial assets that
belong to the same IAS - 39 classifications.
All assets and liabilities must be recognised on balance sheet. All
derivatives must be reported on balance sheet. Historically, in many parts
of the world, derivatives have not been recognised on company balance
sheets. The argument has been that at the time the derivative contract
was entered into, there was no amount of cash or other assets paid.

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 Measurement of Financial Assets and Liabilities is done in two ways:
1) Fair Value
2) Amortised Cost

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 As per IAS-39, FAIR VALUE can be defined as “the amount for which an asset
could be exchanged, or liability settled, or an equity instrument granted, could be
exchanged, between knowledgeable, willing parties in an arm’s length
transaction”.
The transaction to sell the asset or transfer the liability is a hypothetical
transaction on the measurement date, considered from the perspective of a
market participant that holds the asset or owes the liability. Thus Fair value
accounting is not the same as ‘mark-to-market’ accounting.
In certain situations, for example, in the case of securities issued by a closely
held company, market value may not be available but fair value can be
estimated. In certain circumstances, market value does not represent the fair
value.
Fair value accounting should be viewed as ‘mark-to-model’ accounting rather
than ‘mark-to-market’ accounting.
Inputs in Fair Value Estimation are of two types – Observable and Unobservable.
In estimating fair value, entity uses ‘observable’ inputs like assumptions based
on market data from sources independent of the reporting entity.
Unobservable inputs are inputs that reflect the reporting entity’s own
assumptions about the assumptions market participants would use in pricing the
asset or liability developed based on the best information available in the
circumstances.

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 Statement of Financial Accounting Standards - SFAS 157 provides a
hierarchy of inputs being used to determine the fair value.
Fair value hierarchy gives the highest priority to quoted prices
(unadjusted) in active markets for identical assets or liabilities (Level 1)
and the lowest priority to unobservable inputs (Level 3).
Level 2 inputs are inputs other than quoted prices included within Level 1
that are observable for the asset or liability, either directly or indirectly.
Examples of Level 2 inputs are quoted prices for similar assets or
liabilities in active markets and quoted prices for identical or similar
assets or liabilities in markets that are not active.

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 The amortised cost of a financial asset or financial liability is the amount
at which the financial asset or financial liability is measured at
Initial recognition minus
Principal repayments plus or minus
Cumulative amortisation using the effective interest method of any
difference between that initial amount and the maturity amount and
minus
any reduction (directly or through the use of an allowance account) for
impairment or uncollectibility.

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 The Effective Interest Rate (EIR) method is calculating the amortised cost of a
financial asset or a financial liability (or group of financial assets or financial
liabilities) and of allocating the interest income or interest expense over the
relevant period.
The effective interest rate is the rate that exactly discounts estimated future cash
payments or receipts through the expected life of the financial instrument or,
when appropriate, a shorter period to the net carrying amount of the financial
asset or financial liability.
When calculating the EIR, an entity shall estimate cash flows considering all
contractual terms of the financial instrument like prepayment, call and similar
options; but shall not consider future credit losses.
The calculation includes:
All fees and points paid or received between parties to the contract that are an
integral part of the effective interest rate.
 Transaction costs, and
 All other premiums or discounts.
There is a presumption that the cash flows and the expected life of a group of
similar financial instruments can be estimated reliably. However, in those rare
cases when it is not possible to estimate the cash flows reliably or the expected
life of a financial instrument (or group of financial instruments), the entity shall
use the contractual cash flows over the full contractual term of the financial
instrument (or group of financial instruments).

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 This table depicts the status of IFRS compliance in T24

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 T24 currently accrues/amortises interest, discounts and fees on a straight
line basis this needs to continue.
IAS 39 requires that all revenue and expense (for example a fee paid to a
mortgage broker) associated with a loan should be identified and included
in the computation of the EIR.
The EIR is then used to determine the amount of revenue/expense to be
recognised each day.

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 Changes can take place to a contract during its life that can result in a
recalculation of the existing cash-flows.
Para AG7 and AG8 of IAS-39 provides the guidelines for the appropriate
accounting treatment for this scenario.
 Recalculate the EIR using the new cash-flows.
 Adjust the current amortised cost and retain the original EIR value.

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 Amortised Cost
 Build future cash flows from all lending and deposit modules
 Central EIR calculator based on supplied cash-flows
 Central amortised cost calculator based on contract future cash flows
and EIR
 Adjustment accounting for the delta between T24 book cost and
calculated amortised cost
 Ability to takeover existing contract amortised cost and/or EIR

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 For a contract to be IFRS compliant, it requires the details of
IAS.CLASSIFICATION, IFRS.SUB.TYPE & Market rate (for Disclosure
purpose).
 Cash flows will be handed over to the cash flow engine by the
respective applications through a cash-flow handoff routine.
 EIR will be calculated and will be stored in the EB.CASHFLOW
record along with all the necessary Static, Rate and Cash flow
information.
 Based on the updation of the EB.CASHFLOW and the accounting
frequency defined in the IFRS.ACCRUAL.PARAM table, accounting
will be handled to state a particular contract at AMC based on the
classification.
 Comparison will be made between the AMC calculated with the
Contract value stated in the EB.CONTRACT.BALANCES record.
 Differential entry will be posted in order to state the contract at
AMC.
 Basic principle followed:
TR +/(-) IF = IFRS.

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 T24 currently accrues/amortises interest, discounts and fees on a straight
line basis. This needs to be continued.
Contracts classified as HFT & AFS should be stated at fair value, which
can be derived from the Market Rate supplied.
Contracts stated as AMC need to be stated at Fair Value for the disclosure
purpose based on the Market Rate supplied.
Option to be given for the operand margin to the Market Rate.

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 Fair Value:
 Build future cash flows from all lending and deposit modules.
 Central fair value calculator based on the contract future cash flows
and market rate information.
 Adjustment accounting for the delta between T24 book cost and
calculated fair value.
 Ability to takeover existing contract at fair value.

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 For a contract to be IFRS compliant, it requires the details of
IAS.CLASSIFICATION, IFRS.SUB.TYPE & Market rate (for Disclosure
purpose).
 Cash flows will be handed over to the cash flow engine by the
respective applications through a cash-flow handoff routine.
 EIR will be calculated ( in case of FVEQ) and will be stored in the
EB.CASHFLOW record along with all the necessary Static, Cash
flow and Rate information.
 Based on the updation of the EB.CASHFLOW and the accounting
frequency defined in the IFRS.ACCRUAL.PARAM table, accounting
will be handled to state a particular contract at FV based on the
classification.
 Comparison will be made between the FV calculated with the
Contract value stated in the EB.CONTRACT.BALANCES record.
 Differential entry will be posted in order to state the contract at FV.
 Basic principle followed:
TR +/(-) IF = IFRS.

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  Core modules AA,AZ,SL,MM,MG & LD – non IFRS compliant.
 IFRS Module with:
 Cash flow information.
 Soft classification definitions.
 IFRS compliant accounting rules.
 Flexibility for external calculation routines.
 IFRS compliant General Ledger

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 XIRR - Returns the internal rate of return for a schedule of cash flows
that is not necessarily periodic. To calculate the internal rate of return for
a series of periodic cash flows, use the IRR function.
XIRR(values, dates, guess)
Values is a series of cash flows that corresponds to a schedule of
payments in dates. The first payment is optional and corresponds to a cost
or payment that occurs at the beginning of the investment. If the first
value is a cost or payment, it must be a negative value. All succeeding
payments are discounted based on a 365-day year. The series of values
must contain at least one positive and one negative value.
Dates is a schedule of payment dates that corresponds to the cash flow
payments. The first payment date indicates the beginning of the schedule
of payments. All other dates must be later than this date, but they may
occur in any order. Dates should be entered by using the DATE function,
or as results of other formulas or functions. For example, use
DATE(2008,5,23) for the 23rd day of May, 2008. Problems can occur if
dates are entered as text.
Guess is a number that you guess is close to the result of XIRR.

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 Microsoft Office Excel stores dates as sequential serial numbers so they can be
used in calculations. By default, January 1, 1900 is serial number 1, and January
1, 2008 is serial number 39448 because it is 39,448 days after January 1, 1900.
Microsoft Excel for the Macintosh uses a different date system as its default.
 Numbers in dates are truncated to integers.
 XIRR expects at least one positive cash flow and one negative cash flow;
otherwise, XIRR returns the #NUM! error value.
 If any number in dates is not a valid date, XIRR returns the #VALUE! error
value.
 If any number in dates precedes the starting date, XIRR returns the #NUM!
error value.
 If values and dates contain a different number of values, XIRR returns the
#NUM! error value.
 In most cases you do not need to provide guess for the XIRR calculation. If
omitted, guess is assumed to be 0.1 (10 percent).
 XIRR is closely related to XNPV, the net present value function. The rate of
return calculated by XIRR is the interest rate corresponding to XNPV = 0.
 Excel uses an iterative technique for calculating XIRR. Using a changing
rate (starting with guess), XIRR cycles through the calculation until the
result is accurate within 0.000001 percent. If XIRR can't find a result that
works after 100 tries, the #NUM! error value is returned. The rate is changed
until:
where:
di = the ith, or last, payment date.
d1 = the 0th payment date.

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 Pi = the ith, or last,
payment.

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 XNPV - Returns the net present value for a schedule of cash flows that is
not necessarily periodic. To calculate the net present value for a series of
cash flows that is periodic, use the NPV function.
XNPV (rate, values, dates)
Rate is the discount rate to apply to the cash flows.
Values is a series of cash flows that corresponds to a schedule of
payments in dates. The first payment is optional and corresponds to a cost
or payment that occurs at the beginning of the investment. If the first
value is a cost or payment, it must be a negative value. All succeeding
payments are discounted based on a 365-day year. The series of values
must contain at least one positive value and one negative value.
Dates is a schedule of payment dates that corresponds to the cash flow
payments. The first payment date indicates the beginning of the schedule
of payments. All other dates must be later than this date, but they may
occur in any order.

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 Microsoft Office Excel stores dates as sequential serial numbers so they
can be used in calculations. By default, January 1, 1900 is serial number
1, and January 1, 2008 is serial number 39448 because it is 39,448 days
after January 1, 1900. Microsoft Excel for the Macintosh uses a different
date system as its default.
 Numbers in dates are truncated to integers.
 If any argument is nonnumeric, XNPV returns the #VALUE! error
value.
 If any number in dates is not a valid date, XNPV returns the
#VALUE! error value.
 If any number in dates precedes the starting date, XNPV returns the
#NUM! error value.
 If values and dates contain a different number of values, XNPV
returns the #NUM! error value.
XNPV is calculated as follows:
where:
di = the ith, or last, payment date.
d1 = the 0th payment date.
Pi = the ith, or last, payment.

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 To be able to generate different reports to comply with IFRS, the
following module specific parameter tables need to be set up:
 IAS.CLASSIFICATION
 IFRS.ACCT.METHODS
 IFRS.POSTING.DETAILS
 IFRS.EVENT.TYPE
 IFRS.SUB.TYPE
 IFRS.ACCRUAL.PARAM

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 IAS.CLASSIFICATION is the starting parameter table in IFRS Module
set up. This is the existing table available in the IA module. This will be
used for IFRS as well.
IAS - 39 requires a strict classification of financial assets and liabilities
according to their purpose. This classification is extremely important as
it defines various accounting and measurement rules to be applied.
IAS.CLASSIFICATION application is used to define these
classifications.
At present, the following records are available in T24:
ID DESCRIPTION
AFS Available for sale
HFT Held for trading
HTM Held till maturity
LAR Loans and receivables
OL Other liabilities

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 IFRS.ACCT.METHODS stores the accounting methods to be applied for
different kinds of contracts based on the classification of the assets and
liabilities. This is kept as a separate table so that users can do the setup
based on their requirements.
Id for this record can be any alpha-numeric free text.

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 ACCT.HEAD.TYPE, NPV.METHOD, NPV.RATE, POSTING.REQD,
ADJUST.ENTRY and CALC.RTN Fields form a multi-value set in
IFRS.ACCT.METHODS application.
By multi-valuing ACCT.HEAD.TYPE Field, different values can be
defined asset type wise – FAIR VALUE, AMORTISED or
DISCLOSURE.
If NPV method as per IAS.CLASSIFICATION is required then
NPV.METHOD Field needs to be set to Yes. Alternately an external
routine can be attached in CALC.RTN Field. Input of either of these two
fields is mandatory.

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 If NPV.METHOD is set to Yes then NPV.RATE Field is required to be
input. Only EIR method or MARKET method accepted.
When values calculated as per NPV.RATE are required to be posted, then
POSTING.REQD Field is set to Yes.
For example, contracts stated at Amortised Cost need to be valued at
market rate on reporting date for disclosure purpose in order to state them
at fair value. Fair value amount so calculated is not required to be posted
but is only supposed to be disclosed.
ADJUST.ENTRY Field indicates whether the entry to be posted will be
an adjustment to what has already been posted on the contract. This field
is required to be input only when the accounting method is FVEQUITY.
For other accounting methods like AMC, FVPL & DISCLOSURE input
is not required in this field.
Standard methods required for IFRS have already been defined - AMC,
DISCLOSURE, FVEQ and FVPL.

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 IFRS.POSTING.DETAILS is the next important table to define and store
details relating to the way the accounting entries have to be generated to
make the contracts compatible with IFRS requirements. Users can do the
setup based on their requirements.
Id of the records in this table will be a free text to link to the contracts at
IAS.CLASSIFICATION or IFRS.SUBTYPE level (We will look to
IFRS.SUBTYPE a little later).
POSITION.TYPE Field is hardcoded with value “IF”. This value will be
populated by the system when a record input is validated.
When valuations take place every day, system updates the information for
all contracts.
Under “Adjust” basis, system will post only the difference between
yesterday’s value and today’s value updation.
Under “IO” basis, system will reverse yesterday’s value and repost new
value. This posting style is set in POSTING.STYLE Field.

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 Asset types are already defined in the IFRS.ACCT.METHODS - like
FAIRVALUE, AMORTISED and DISCLOSURE. ACCT.HEAD.TYPE
Field is meant for indicating the asset type. ACCT.TYPE Field is to
specify whether the posting is to happen to the CONTINGENT or the
NON-CONTINGENT base. Contracts that are stated at Amortised Cost
require fair valuation on the reporting date for the disclosure purpose.
The fair value amount so calculated is required to be posted to a
contingent base.
When adjustment entries are raised, the result would be profit or loss.
You can specify different category codes for Profit and Loss. Then
ENTRY.TYPE Field can have a value “PROFIT” or “LOSS”. The third
option “BOTH” if opted, system will post profit or loss to the same
category.
ENTRY.TARGET Field specifies whether the entry needs to be raised to
Internal Accounts, PL categories or to the CRF base along with the details
of the contra entries to be raised.
POSTING.DETAILS required for IFRS have already been defined -
AMC, DISCLOSURE, FV and FVEQ.

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 When a contract is amended and cash flows are affected, cash flow
engine is called to update the current cash flows in EB.CASHFLOW.
This is done on the event that triggers the cash flow change. This event is
passed to the cash flow engine during the amendment of the contract.
The amendment processing can be the recalculation of the EIR or the
adjustment to the amortised cost calculated previously. The design has
been done such that user has the option to select the recalculation method
as per the rules defined in para AG7 and AG8 of IAS 39.
IFRS.EVENT.TYPE table stores various events that can occur over the
life of a contract which can amend the cash flows pertaining to it.

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 For each type of contract, IFRS.SUB.TYPE table stores details relating to
IFRS.ACCT.METHODS and IFRS.POSTING.DETAILS along with the
details of amendments to cash flows and Effective Interest Rate (EIR).
Id is free text.
While DESCRIPTION Field gives a meaningful description of the sub
type, ACCOUNTING.METHOD and POSTING.DETAILS Fields specify
the values from IFRS.ACCT.METHODS and IFRS.POSTING.DETAILS
respectively.

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 DEF.RECALC.METHOD is the field to denote the recalculation method
to be used in case of an associated event being triggered.
It provides the option to either Adjust the AMC Balance or Recalculate
the EIR in case of change in the cash flow event. If the option is set at
this level, the system will apply the recalculation method same for all the
cash flow events triggered. CARRY.COST and EIR are the options
available.
Also for the accounting for specific event types, the cash flow change
events can be defaulted from IFRS.EVENT.TYPE and the options can be
defined here either to Adjust the AMC Balance or Recalculate the EIR.
TERM Field specifies the periodicity for which EIR is supposed to be
calculated. It can be either ‘FULL’ - where the entire period of the
contract will be taken for calculating the EIR or ‘SHORT’ - which
applies to rate re-set contracts, where EIR needs to be calculated till the
next rate change date.

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 IFRS.ACCRUAL.PARAM application is set up for each company to
define accrual frequency for each of the IFRS Subtypes defined. Each
subtype can have a different accrual cycle.
Different options available are – Daily, Bsnss, Twmth, Wn, Mnndd.
System maintained IFRS.ACCOUNTING.DETAILS table will be
updated by choosing “Yes” in UPD.ACCT.DTLS Field. Choosing “No”
will not update the table.
All the IFRS.SUB.TYPES defined have been mapped to
IFRS.ACCRUAL.PARAM.

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 To generate IFRS compliant entries, following fields are mandatory at
contract level
IAS.CLASSIFICATION
IAS.SUB.TYPE
MARKET.KEY and
MARKET.MARGIN

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 Contract applications will be changed to project all future cash flows for
the entire period of the contract and call the cash flow handoff routine
with this information during the input stage.
If there are subsequent amendments to cash flows, cash flow engine will
be updated with the amendments to cash flow.

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 EB.CASHFLOW application generates cash flows for contracts input in
different applications. This information is useful for IFRS compliance.
Static information relating to the contract is captured and displayed in the
following fields:
CURRENCY
INTEREST.BASIS
IAS.CLASSIFICATION
IFRS.SUB.TYPE
CONTRACT.RATE
ACCRUAL.METHOD

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 This parameter will be mandatory for the contracts that are accounted
using the Fair Values. For Amortised Cost contracts, this field will be
mandatory if the contract has to be disclosed at a fair value. This
parameter will be validated based on the IAS.CLASSIFICATION of the
contract.
This information can be input when the user inputs the contract and can
be amended later. The following are the elements of the Rate Information:
 MARKET.KEY
 MARKET.MARGIN (includes MARGIN operand)
The rate information can be linked at the contract level by using the
PERIODIC.INTEREST table. Also option is given in the field to input the
rate manually instead of using the PI key. Flexibility is given to the user
through the field MARKET.MARGIN to include margin as a percentage
of the market rate in to the calculation of the fair value. Both positive and
negative margin percentage can be inputted.
For example if the market rate is 10%. With the positive margin of
+0.50%, the net rate for the calculation will be 10.50% and with a
negative margin of -0.50%, the net rate for the calculation will be 9.50%.

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 This parameter will contain the cash flow information for the contract.
Each cash flow block in turn will contain the following elements:
 CASHFLOW.DATE: The date of the actual cash flows.
 CASHFLOW.AMOUNT: This is the actual cash flow amount,
which needs to be signed.
 CASHFLOW.ACCRUAL.HEAD: This will contain the accrual
category of the cash flow in case the cash flow is an interest
accrual.

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 For each commission defined in FT.COMMISSION.TYPE table, option
available for inclusion or exclusion of the commission to arrive at the EIR
for the contract. EXLCUDE.FROM.EIR Field is used for this purpose.

T3TIF - IFRS - R14.1 120

 ASSET.LIAB.IND Field will have the Asset and Liability indicator,
which will be updated based on the initial sign of the contract.
POSTING.DETAILS.ID Field will have the IFRS.POSTING.DETAILS
ID, which will be updated by the system.
EIR.REQD Field will have a flag to indicate whether EIR calculation is
required or not.
EVENT.TYPE Field states the cash flow change event, which will be
passed on by the application.
EIR Field will store the effective rate of interest calculated based on the
information supplied to the EB.CASHFLOW.HANDOFF by the
applications.

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T3TIF - IFRS - R14.1 122
 Cash flow information is held in the application called EB.CASHFLOW.
Unauthorised records are maintained in EB.CASHFLOW.NAU and
closed records are maintained in history file EB.CASHFLOW.HIS.

T3TIF - IFRS - R14.1 123

 Different System maintained tables are:
IFRS.ACCT.BALANCES - This table will store the accrued balances
(calculated balances) for different asset types per contract.
IFRS.ACCOUNTING.DETAILS – This table holds the details of various
components used for calculation of IFRS entries.

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 REVALUATION Field in SEC.ACC.MASTER decides the different
accounting treatment for the unrealised gain/loss as per IAS 39.
Based on the following fields, unrealised gain/loss will be either taken to
Profit & Loss or to Internal account(Equity)
REAL.PL.CAT.PROFIT
REAL.PL.CAT.LOSS
UNREAL.LOSS.PROV
UNREAL.PROFIT.SUSSP
PORTFOLIO.TYPE Field is the narrative to specify different
classification of assets as per IAS39.

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 The entries generated comply with the requirements of Held-for-Trading
assets as per IAS-39, all contracts classified under HFT should be
measured at Fair Value and any gains or loss should be recognized
immediately in the income statement (FVPL). For HFT the system has
raised a CATEG.ENTRY and a STMT.ENTRY.

Note Look at the CPL record for the PL CATEGORY 51040 to see the
balance and the internal account USD146670001 ( you can also look at
the CAL record for category 14667)

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 The entries generated comply with the requirements of Available-for Sale
assets as per IAS-39, contracts classified at AFS should be measured at
FAIRVALUE and any gains or loss is booked in equity (FVEQ). In this
example the system has raised a stmt entry to reflect the change in
fairvalue and the contra entry is to an internal account for equity.

Note if you look at the internal accounts you will see they now have
balances on them which reflect this.

T3TIF - IFRS - R14.1 169

 Existing DERIVATIVES Module in T24 is IFRS Compliant
Variation Margin > Above the line
Value of the Contract > Below the line
Basic setup required in DX.PARAMETER are two fields –
VM.POST.STYLE and CONT.ULYING.VAL.

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 What is impairment under IFRS?

Impairment is the reduction in value of Assets where there is objective

impairment evidence.

This reduction is referred to as the Impairment Loss.

The impairment loss is measured as the difference between the carrying

amount of the financial asset and the present value of the expected cash
flows.

In T24, an asset is impaired if its carrying amount exceeds the estimated

recoverable amount, where the carrying amount is the amount at which
the asset is recognised in the Balance Sheet.

Note In addition to the IA module, the PV module must be installed to use

the impairment functionality.

T3TIF - IFRS - R14.1 172

 An Example

A loan contract with a carrying amount of USD 600,000 has a recoverable amount of
only USD 500,000. As the recoverable amount is less than the carrying amount the
contract is impaired.

The USD 100,000 difference between the carrying amount and the recoverable
amount is known as the “Impairment Loss”

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 What can cause a contract to become impaired?

There are recognised and excepted reasons which are published by IFRS
defining what may cause a to become impaired. Some of these are

•Significant financial difficulty of the issuer or borrower

•A breach of contract, such as a default or delinquency in principle or
interest payments
•Legal and Economic Factors
•The disappearance of an active market for that financial asset because of
financial difficulties
•National and local economic trends and conditions

This is a sample of accepted reasons of objective evidence that may cause

a contract to become impaired. For a complete list refer to IAS39:59

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 T24 supports both Individual and Group impairment

For Individual impairment the following workflow applies

The size of the impairment loss is of significant value to a bank to be

impaired individually
There must be objective evidence of the impairment
There must be an impact on the estimated future cash flow of the contract
The recoverable cash flow amount is less than the carrying amount of the
contract in the balance sheet
The impairment loss can then be booked

For Group Impairment the following workflow applies

Group of contracts
Any contracts that have been individually impaired may not be included
Contracts are grouped under the same credit risk characteristics
Statistical methods may be used to calculate the impairment loss
It is based on the incurred loss model

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 Additional configuration is required for impairment processing in the
applications

IFRS.IMPAIRMENT.CODE
IFRS.ACCT.METHODS
IFRS.ACCRUAL.PARAM
IFRS.POSTING.DETAILS

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 As mentioned earlier there is an acceptable list of reasons for impairment.
This is known as impairment evidence.

The IFRS.IMPAIRMENT.CODE application is used to record these.

Some codes have been predefined and are delivered with Model Bank

New codes can be entered as and when required

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 IFRS.ACCT.METHODS has been explained previously. However
additional configuration is required for impairment in both the records
AMC and FVEQ

For AMC the additional ACCT.HEAD.TYPE’s are

IMPAIR.AMORTISED - The impairment loss of contracts valued at

Amortised Cost
UNWIND - The unwinding of the carrying amount of an impaired
contract
IMPAIR.AMC.ADJUST – The adjustment to the impairment loss for an
impaired contract valued at Amortised Cost

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 The recommended setup for IFRS.ACCT.METHODS for Amortised cost
is shown.

For the three additional ACCT.HEAD.TYPE’s the fields NPV.METHOD;

NPV.RATE and POSTING.REQD need to be defined.

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 The recommended setup for IFRS.ACCT.METHODS for FVPL cost is
shown.

The new ACCT.HEAD.TYPES which are required for FVPL impairment

are
IMPAIR.FAIRVALUE
IMPAIR.FV.ADJ.DEC
IMPAIR.FV.ADJ.INC

For the three additional ACCT.HEAD.TYPE’s the fields NPV.METHOD;

NPV.RATE and POSTING.REQD need to be defined.

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 For FVEQ the following ACCT.HEAD.TYPE’s need to added to the
record

IMPAIR.AMORTISED - The impairment loss of contracts valued at

Amortised
UNWIND - The unwinding of the carrying amount of an impaired
contract
IMPAIR.AMC.ADJUST - The adjustment to the impairment loss for an
impaired contract valued at Amortised Cost
AMORTISED.UNDER.IMP - The normal amortised adjustment to a
contract valued at both Amortised cost and Fairvalue whereby there is
impairment on Fairvalue but not on Amortised cost
IMPAIR.FAIRVALUE - To hold the movement and balances for first time
impairment for contract valued at FAIRVALUE
IMPAIR.FV.ADJ.INC - To hold the movement and balances for
subsequent increase in impairment for an impaired contract valued at
FAIRVALUE
IMPAIR.FV.ADJ.DEC - To hold the movement and balances for
subsequent decrease in impairment for an impaired contract valued at
FAIRVALUE

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 The recommended setup for IFRS.ACCT.METHODS for FVEQ is
shown.

For the additional ACCT.HEAD.TYPE’s the fields NPV.METHOD;

NPV.RATE and POSTING.REQD need to be defined.

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 Additional ACCT.HEAD.TYPE’s need to be defined in the
IFRS.POSTING.DETAILS records for both AMC, FV and FVEQ

For AMC the following ACCT.HEAD.TYPE’s are required to be defined

IMPAIR.AMORTISED
UNWIND
IMPAIR.AMC.ADJUST

The screenshot above shows an example setup from model bank for
ACCT.HEAD.TYPE IMPAIR.AMORTISED from the
IFRS.POSTING.DETAILS record AMC

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 For FV the following ACCT.HEAD.TYPE’s are required to be defined

•IMPAIR.FAIRVALUE
•IMPAIR.FV.ADJ.DEC
•IMPAIR.FV.ADJ.INC

The screenshot above shows an example setup from model bank for
ACCT.HEAD.TYPE IMPAIR.FV.ADJ.DEC from the
IFRS.POSTING.DETAILS record FV

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 For FVEQ the following ACCT.HEAD.TYPE’s are required to be defined

IMPAIR.AMORTISED
UNWIND
IMPAIR.AMC.ADJUST
AMORTISED.UNDER.IMP
IMPAIR.FAIRVALUE
IMPAIR.FV.ADJ.INC
IMPAIR.FV.ADJ.DEC

The screenshot above shows an example setup from model bank for
ACCT.HEAD.TYPE IMPAIR.AMC.ADJUST from the
IFRS.POSTING.DETAILS record FVEQ. These will need to be set up
for all the new ACCT.HEAD.TYPES.

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 The IFRS.ACCRUAL.PARAM record needs to have additional multi
value groups added to cater for all the IFRS.SUB.TYPES for
IMPAIRMENT.

In the example above the following fields have been multi valued and
input to accommodate IMPAIRMENT for FIXEDRATE,
FLOATING.RATE and FVEQUITY. Note all IFRS.SUB.TYPES must be
included.

IFRS.SUB.TYPE
ACCT.FREQ

T3TIF - IFRS - R14.1 187

 When a contract is impaired or unimpaired the following applications are
used or updated by the impairment process

IFRS.DATA.CAPTURE
EB.CASHFLOW
IFRS.ACCT.BALANCES
IFRS.ACCT.DETAILS
EB.CONTRACT.BALANCES

T3TIF - IFRS - R14.1 188

 The IFRS.DATA.CAPTURE application is used to perform operations on
IFRS contracts. For impairment processing the following operations are
supported

IMPAIR - Operation to impair a contract

UNIMPAIR – Operation to un-impair a contract
IMPAIR.AMENDMENT – Operation to make an amendment to an
already impaired contract

Through the IFRS.DATA.CAPTURE application the following modules

can be impaired

AA.ARRANGEMENT.ACTIVITY
AZ.ACCOUNT
LD.LOANS.AND.DEPOSITS
MM.MONEY.MARKET
SL.LOANS

T3TIF - IFRS - R14.1 189

 MG.MORTGAGE

T3TIF - IFRS - R14.1 189

 The existing process as Amortised

 Build future cash flows from all lending and deposit modules
 Central EIR calculator based on supplied cash-flows
 Central amortised cost calculator based on contract future cash flows
and EIR
 Adjustment accounting for the delta between T24 book cost and
calculated amortised cost
 Ability to takeover existing contract amortised cost and/or EIR

When a contract is impaired the following processes will happen

•Calculate the NPV on the expected cash flow

•Compare the NPV of the expected cash flow with the NPV of the
contractual cash flow
•Post the difference as the impairment loss to ACCT.HEAD.TYPE
IMPAIR.AMORTISED
•Transfer the amortised adjustment balance from ACCT.HEAD.TYPE

T3TIF - IFRS - R14.1 190

 AMORTISED to UNWIND
•Subsequent difference in the present value of the expected cash flows will be posted
to ACCT.HEAD.TYPE UNWIND
•Subsequent increase or decrease in the impairment loss will be posted to
ACCT.HEAD.TYPE IMPAIR.AMC.ADJUST

T3TIF - IFRS - R14.1 190

 How to impair a contract?

In this example a model bank version for impairing a contract has been used. This
contract has been classified as Loans and Receivables (AMC)

In the Basic details tab the contract details are entered, namely the

APPLICATION – Of the contract to be impaired

CONTRACT.NO – Contract ID to be impaired
OPERATION – In this instance this is Impair
EFFECTIVE.DATE – The date that the impairment of the contract is to take effect, this
can not be a date in the past.

In the Objective Evidence and Action notes tab the reason for contract being impaired is
given,

The field IMPAIRMENT.CODE defines the objective evidence. This field may only be
input if the field OPERATION is set to either IMPAIR, IMPAIR.AMENDMENT OR
UNIMPAIR

The field ACTION.NOTES can be used to give additional reasons to justify the
impairment of a contract.

These fields may be multi valued so that multiple reasons for impairment can be entered
if required.

T3TIF - IFRS - R14.1 191

 The Cash Flow Details tab is used to enter the details of the expected cash flow
for the contract

The field DEF.CASH.FLOW.METHOD details how the cash flow is entered; it

can be
MANUAL – Cash flows have been manually entered
CONTRACTUAL – Updates with the contractual cash flows from the contract
EXPECTED – Updates the expected cash flow from the EB.CASHFLOW
record.

The EXP.CASHFLOW.DATE holds the date of the expected cash flow and the
EXP.CASH.FLOW.AMOUNT holds expected cash flow amount for the
contract.

In the IMPAIRMENT LOSS tab

The ACCT.RUN.OPTION is used to determine when the accounting entries are

raised.
The system only supports ONLINE, if left blank the default is ONLINE.

T3TIF - IFRS - R14.1 192

 When the IFRS.DATA.CAPTURE record has been authorised the system
calculates the impairment loss and updates the field IMP.LOSS.AMORT
with the amount.

The calculation of the IMPAIRMENT.LOSS is the difference between the

Net Present value of the contractual cashflow (amortised) and the Net
Present Value of the expected cashflow. In this example

NPV Contract CF is -26,035.21

NPV Expected CF is -19,796.13
Impairment Loss is 6,239.08

So in this example the impairment loss (amortised) has been calculated as

6,239.08

Note should the contract have been classified as Fair Value then the
system would have updated the field IMP.LOSS.FV with the impairment

T3TIF - IFRS - R14.1 193

 loss calculated.

T3TIF - IFRS - R14.1 193

 The EB.CASHFLOW records are compared from before and after the
contract is impaired.

Notice in the latest version of the EB.CASHFLOW the details entered the
IFRS.DATA.CAPTURE record have updated the EB.CASHFLOW field

EXP.CFLOW.DATE
EXP.CFLOW.AMT
IMPAIRMENT.CODE
ACTION.NOTES
TRANS.REFERENCE

The field IMPAIRMENT.STATUS is now set to IMPAIRED and the

DATE.IMPAIRED is set to the date the contract was impaired

T3TIF - IFRS - R14.1 194

 The IFRS.ACCT.BALANCES record has been updated.

The field NPV.CON.CF.AMORT holds the Net present value of the

contractual cash flow and the NPV.EXP.CF.AMORT holds the Net
present value of the expected cash flow.

To calculate the Net Present Value Contractual cashflow (amort) take the
CONTRACT.BALANCE minus the balance in the ACCT.HEAD.TYPE
AMORTISED .

Contract Balance -26,035.39

ACCT.HEAD.TYPE AMORTISED - 0.18
Npv Con Cf AMORT = -26,035.21

The amount of 0.18 has been reversed from the ACCT.HEAD.TYPE

AMORTISED with an UNWIND.

The impairment loss has been posted to ACCT.HEAD.TYPE

T3TIF - IFRS - R14.1 195

 IMPAIR.AMORTISED. This is the difference between NPV.CON.CF.AMORT and
NPV.EXP.CF.AMORT.

NOTE
If the contract is initially classified as FAIRVALUE when it becomes impaired the
balance in ACCT.HEAD.TYPE FAIRVALUE will be moved to
IMPAIR.FAIRVALUE. The fields NPV.CON.CF.FAIRVALUE and
NPV.EXP.CF.FAIRVALUE will be populated.

T3TIF - IFRS - R14.1 195

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T3TIF - IFRS - R14.1 198
T3TIF - IFRS - R14.1 199
 Once a contract is impaired it is possible to make additional adjustments
to the impairment using the application IFRS.DATA.CAPTURE
OPERATION IMPAIRAMEND

This could be either an increase to the impairment amount or decrease

depending on the individual circumstances.

T3TIF - IFRS - R14.1 200

 The LD1111502118 has been impaired. It now has an expected cash flow
of 20,000.

In the IFRS.ACCT.BALANCES the Impairment loss of 6,163.20 has

been posted to the ACCT.HEAD.TYPE IMPAIR.AMORTISED.

T3TIF - IFRS - R14.1 201

 To amend the impairment, in the IFRS.DATA.CAPTURE enter the following:

Contract details;
APPLICATION
CONTRACT.NO
The CURRENCY has defaulted and the OPERATION is already set to
IMPAIR.AMDENDMENT as it is defaulted in the version.

Enter the IMPAIRMENT.CODE and ACTION.NOTES

Enter the new cash flow details for the contract, in the example the following
fields are being used

DEF.CASH.FLOW.METHOD
EXP.CASH.FLOW.DATE
EXP.CASH.FLOW.AMOUNT

In this example the expected cash flow is being reduced to 15,000

Note it is possible to multi value these fields for individual cash flows on
different dates.

T3TIF - IFRS - R14.1 202

 After authorisation the IFRS.DATA.CAPTURE record has been updated
with the new impairment loss total in the field IMP.LOSS.AMORT.

The new impairment loss calculated for the LD1111502118 is 11,124.62

T3TIF - IFRS - R14.1 203

 The EB.CASHFLOW record has been updated with the new cash flow details.
The EXPECTED.CFLOW.AMT field has been updated to reflect the new
expected cash flow for this contract of 15,000.

In the IFRS.ACCT.BALANCES the new additional loss of 4,961.42 has updated

the ACCT.HEAD.TYPE IMPAIR.AMC.ADJUST. The original loss of 6163.20
remains under the ACCT.HEAD.TYPE IMPAIR.AMORTISED.

The IMPAIRMENT.LOSS that was calculated and updated in the

IFRS.DATA.CAPTURE record shown previously is the total of the balances
held under the ACCT.HEAD.TYPE IMPAIR.AMORTISED and
IMPAIR.AMC.ADJUST.

The NPV.EXP.CF.AMORT is calculated as

Take the CONTRACT.BALANCE of -26,010.11

LESS
ACCT.HEAD.TYPE IMPAIR.AMORTISED - 6,163.20
ACCT.HEAD.TYPE IMPAIR.AMC.ADJUST - 4,961.42
ACCT.HEAD.TYPE UNWIND - 1.23
NPV.EXP.CF.AMORT -14,884.26

T3TIF - IFRS - R14.1 204

T3TIF - IFRS - R14.1 205
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T3TIF - IFRS - R14.1 207
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T3TIF - IFRS - R14.1 209
T3TIF - IFRS - R14.1 210
 A contract may be unimpaired where there is no evidence that it is still a
bad debt. The client has paid off any outstanding overdue balances and is
again making the regular payments to the contract.

The IFRS.DATA.CAPTURE record is used to UNIMPAIR contracts

The field OPERATION is set to UNIMPAIR

T3TIF - IFRS - R14.1 211

 In the example the MM contract has been impaired. The expected cash
flow for the contract is 9,900 as shown in the EB.CASHFLOW record.

In the IFRS.ACCT.BALANCES record the ACCT.HEAD.TYPES

IMPAIR.AMORTISED and UNWIND are populated

T3TIF - IFRS - R14.1 212

 Using the model bank version to unimpair a contract the
IFRS.DATA.CAPTURE record is entered.

In the tab ‘Basic Details’ enter the fields

•Application
•Contract no

Notice the operation is defaulted to Unimpair in the version

In the tab ‘ Objective Evidence and Action Notes’ enter the fields
•Impairment Code
•Action Notes

Note a record on the application IMPAIRMENT.CODE could be created

specifically for unimpairment in the example above we are using 999 for
others.

T3TIF - IFRS - R14.1 213

 Once the IFRS.DATA.CAPTURE record has been authorised the
EB.CASHFLOW record for the contract has been amended.

The field IMPAIRMENT.STATUS has been amended to ‘Unimpaired’

and the field DATE.UNIMPAIRED has been updated with today’s date.

T3TIF - IFRS - R14.1 214

 The IFRS.ACCT.BALANCES and IFRS.ACCOUNTING.DETAILS
records have been updated.

Notice that under each ACCT.HEAD.TYPE the balances have been

reversed.

T3TIF - IFRS - R14.1 215

T3TIF - IFRS - R14.1 216
T3TIF - IFRS - R14.1 217
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T3TIF - IFRS - R14.1 219
T3TIF - IFRS - R14.1 220
 In order for impairment processing to work with Security contracts that
have been classified as AFS. Additional set up must be done in the
system.

Firstly a new category code must be created specifically for security

impairment. This should be in the PL category code range of 50000-
69999.

In the SC.PARAMETER record the field IMPAIRMENT must be set to

Yes and the new category code entered in to the field
IMPAIRMENT.CATEG.

T3TIF - IFRS - R14.1 221

 The SC.IMPAIRMENT application is used to impair AFS Securities.

The ID should be a valid record on the SECURITY.MASTER application.

The field PORTFOLIO specifies the Portfolio for which the impairment
process is to be performed. This may be multi-valued
The objective evidence is entered in the IMPAIRMENT.REASON field.

When there is evidence that a contract is no longer impaired the fields

CANCEL and CANCEL.DATE are used to stop the impairment
processing happening on a contract.

If a contract has been impaired in error then the SC.IMPAIRMENT

record should be reversed.

T3TIF - IFRS - R14.1 222

 When the SC.IMPAIRMENT record is authorised the impairment for
(AFS) securities is processed by Securities.

When there is a market rate or market price change, revaluation

calculations are performed, if there is a cumulative loss in equity it is
posted to P&L. When further revaluations are performed, if there are
subsequent losses these will be posted to P&L, However if there are
subsequent gains in Equity these are posted to Equity.

Note as these entries are calculated and posted by the SC application the
Position Type on these entries will be TR and not IF. There will be no
EB.CASHFLOW record created/maintained for SC contracts.

T3TIF - IFRS - R14.1 223

T3TIF - IFRS - R14.1 224
 In T24 it is only possible to reclassify contracts that have an initial
classification of either Held for Trading (HFT) or Available for Sale
(AFS) for the modules AA, AZ, LD ,MM and SL.

These can only be reclassified to Loans and Receivable (LAR)

T3TIF - IFRS - R14.1 225

 The application IFRS.DATA.CAPTURE is used to reclassify the contracts
from either HFT or AFS to LAR.

The OPERATION must be set to RECLASSIFY.

Once reclassified all the balances will be moved from the

ACCT.HEAD.TYPE FAIRVALUE to the ACCT.HEAD.TYPE
AMORTISED.

T3TIF - IFRS - R14.1 226

 In the example the LD1022100200 has an initial classification as HFT
and the IAS.SUB.TYPE is FVCONTRACTS

An IFRS.DATA.CAPTURE record is entered, the

OPERATION is set to ‘RECLASSIFY’

NEW.IAS.CLASS is set to ‘LAR’
NEW.IAS,SUBTYPE is ‘AMCCONTRACTS’

T3TIF - IFRS - R14.1 227

 In the EB.CASHFLOW record the fields IAS.CLASSIFICATION and
IAS.SUB.TYPE have been updated to the new values. The fields
PREV.IAS.CLASS and PREV.IAS.SUBTYPE have been updated with the
previous classification and sub type.

In the IFRS.ACCT.BALANCES record we can see that on the date of

reclassification the balances moved from FAIRVALUE
ACCT.HEAD.TYPE to the AMORTISED ACCT.HEAD.TYPE.

Note After the COB has run the net present value of the contractual
cashflow will be stored in the field NPV.CON.CF.AMORT.

T3TIF - IFRS - R14.1 228

 Once collateral has been allocated to a contract. When a contract is
impaired the collateral details are automatically updated in the
IFRS.DATA.CAPTURE record when the field FEED.OPTION is set to
AUTOMATIC

The collateral amount is taken from the underlying

EB.CONTRACT.BALANCES record

This is available for AA, AZ, LD, MM, MG and SL contracts

The collateral amount can also be entered manually into the

IFRS.DATA.CAPTURE record.

T3TIF - IFRS - R14.1 229

 In this example there is USD 60,000 of collateral allocated to this
LD0100600001

The following fields contain the collateral information

RISK.COLL.RGT - Contains the COLLATERAL.RIGHT id
RISK.COLL.ID – Contains the COLLATERAL.ID
COLL.CCY - Holds the currency of the collateral
ALLOC.AMT - Contains the amount of the collateral allocated to the
contract

T3TIF - IFRS - R14.1 230

 When a contract is impaired through IFRS.DATA.CAPTURE if there is
collateral allocated to it the system can default this from the
EB.CONTRACT.BALANCES record.

The COLLATERAL.ID field is entered and when the field

FEED.OPTION is set to AUTOMATIC the collateral details will be
updated by the system automatically.

In the example for LD0100600001 the following fields have been

defaulted

EXP.COLL.DATE
EXP.COLL.AMT
COLL.RATE.AMORT

Note the collateral information will also update the

IFRS.ACCT.BALANCES and IFRS.ACCOUNTING.DETAILS records.

T3TIF - IFRS - R14.1 231

 What application is used to impair security contracts?
Ans – SC.IMPAIRMENT

A contract can be reclassified from AFS to HFT? True or False

Ans – FALSE

Once a contract has been impaired it can never be unimpaired? True or

False
Ans – False

Once a contract is impaired which of the ACCT.HEAD.TYPE’S will the

loss be posted?
AMORTISED
UNWIND
IMPAIR.AMORTISED
IMPAIR.FAIRVALUE
Ans IMPAIR.AMORTISED or IMPAIR.FAIRVALUE

T3TIF - IFRS - R14.1 232

 So far we have seen
Overview of IFRS and T24 IFRS Module
Understand Multi GAAP reporting
Classification of Financial Assets and Financial Liabilities
Measurement of Financial Assets and Financial Liabilities using
Amortised Cost and Fair Value accounting
Dependencies and parameter tables to be set up
Linkages between IFRS module and T24 Accounting & Reporting
Generating IFRS compliant reports in T24
The impairment process in T24
Reclassification of contracts

T3TIF - IFRS - R14.1 233

T3TIF - IFRS - R14.1 234