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IFRS 7Workpapers (Step 4 of 5)

Workpaper assignment

Step 4 of 5
Mission · workpaperWorkpaper · IFRS 7L4 · Expert

Documents

Company profile and case conventions

Memo

Company profile and case conventions

Dornel SA (fictitious entity) closes its accounts on 31 December 20X6; its functional currency is the euro. Case conventions: amounts in EUR; the flows of the maturity table are those of the contracts, without discounting; case convention (pedagogical assumption, not attributed to IFRS 7): the floating rate of the closing date applies to all the future interest; the reconciliation of the loss allowance contains no recovery and no transfer; the effect on equity equals the effect on profit or loss before tax; the entries are illustrative.

Liquidity risk and market risk: maturity analysis on contractual cash flows, difference from the carrying amount and sensitivity analysis

File on the financial instrument disclosures: classes, credit risk, liquidity, sensitivity and transfers of assets (IFRS 7)

7 documents8 sections to document
0 / 5 sections completed
Guided mode

Section 1 of 8

Objective

In progress
Section brief
What to document
The engagement, its scope and the working mode chosen.
Why
A workpaper answers one precise question: framing it avoids off-topic work.
How
Read the objective and the assignment, then choose the mode (guided, semi-guided, professional).
Expected result
You know which question the workpaper must settle, and for which reporting date.
Your role
Preparer of the IFRS 7 workpaper
Level
Expert
Estimated time
≈ 75 min
Progress
0 / 4 steps done (review excluded)

Context

Dornel SA (fictitious entity) closes its accounts on 31 December 20X6. The preparer builds the file of the notes on financial instruments, submitted to a review check: classes of the line item of receivables and investments, credit risk of the trade receivables, maturities and sensitivity of the debt, transfer of receivables with limited recourse. Teaching simulation: the review trail of the file (preparation, reviewer notes and final sign-off) is simulated for demonstration purposes; it is neither a real review nor a validation of the content.

Assignment

Maturities and sensitivity of the debt

Purpose of the workpaper

Enter in each maturity bucket the contractual cash flows of the financial liabilities as they appear in the contract and without discounting (convention of the table), add them by bucket and in total, compare the total with the carrying amount, and calculate the effect on profit or loss of a reasonably possible change in the risk variable. The buckets, the flows and the change are case data; the change is a judgment of the entity and is not imposed by the standard.

Questions of the file covered by this workpaper

  • Compute the total of the flows of the first maturity bucket.
  • Compute the total of the flows of the second maturity bucket.
  • Compute the total of the undiscounted contractual cash flows.
  • Compute the difference between the total of the flows and the carrying amount.
  • Is the change in rates retained reasonably possible, in view of the documents?
  • Compute the effect on profit or loss of the increase retained.

Documents in the file

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