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IFRS 9Workpapers (Step 4 of 5)

Workpaper assignment

Step 4 of 5
Mission · workpaperWorkpaper · IFRS 9L4 · Expert

Documents

Group profile and file conventions

Memo

Group profile and file conventions

Vestrel Industries SA (fictitious entity), an industrial group, closes its consolidated accounts on 31 December 20X6. File conventions: amounts in EUR; the losses of each scenario are given discounted; the original effective interest rate and the credit-adjusted rate are data; the recalculated gross carrying amount of a modified asset is the present value of the modified cash flows at the original effective interest rate (the file's recalculation method); file convention (pedagogical assumption, not imposed by IFRS 9): the expected loss of the credit line is computed as exposure × probability of default × loss given default, without discounting; differences are expressed as percentages; the entries are illustrative.

Impairment: stage of each instrument, significant increase in credit risk, expected loss by scenarios or by probability of default, provision matrix and reconciliation of the loss allowance: Modified loan Z

File of an industrial group: hybrid contracts and separation, modification of an asset, assets credit-impaired from origination, loan commitments and maximum exposure period

8 documents9 sections to document
0 / 6 sections completed
Guided mode

Section 1 of 9

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 9 workpaper
Level
Expert
Estimated time
≈ 90 min
Progress
0 / 5 steps done (review excluded)

Context

Vestrel Industries SA (fictitious entity), an industrial group, closes its consolidated accounts on 31 December 20X6. Its central treasury holds a securitisation tranche and several loans, the group issued a bond indexed to copper, renegotiated a loan, acquired an already credit-impaired receivable and granted a revolving credit facility to its distributors. You prepare the analyses, calculations and entries of the file.

Assignment

Impairment of the modified loan, of the receivable acquired credit-impaired and of the revolving facility

Purpose of the workpaper

Describe the instrument, establish its stage (12-month, lifetime, credit-impaired) or the simplified approach, document the judgments on the significant increase in credit risk, the scenarios and the definition of default, measure the expected loss (scenarios, probability of default × loss given default × exposure, or provision matrix), compute the charge, reconcile the loss allowance and prepare the entries and the note. Rates, probabilities and forward-looking information are case data, never rules of the standard.

Questions of the file covered by this workpaper

  • Assess the significant increase in credit risk of the modified loan Z and retain the measurement basis.
  • Compute the weighted expected credit loss of loan Z and the loss allowance of the Karvel receivable acquired credit-impaired.
  • Record the loss allowance of loan Z.
  • Compute the 20X6 interest of the Karvel receivable at the credit-adjusted effective interest rate.
  • Compute the net amortised cost of the Karvel receivable at the reporting date.
  • Record the loss allowance of the Karvel receivable.
  • Compute the expected loss of the credit facility (exposure × probability of default × loss given default).
  • Record the loss allowance of the credit facility.

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