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WorkpaperIFRS 7 — Financial Instruments: DisclosuresL2 · L3

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

2 missions8 sections to document75 min
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Status
Published

Objective 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.

8 sections · 27 blocks · 6 calculations · 0 entries

  • IFRS 7 §39

Work this workpaper as a mission

Each case that uses this template opens in the mission workspace: data, analysis, calculation, entries, conclusion and review, with your progress saved.

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File and entity
Liquidity risk and market risk: maturity analysis on contractual cash flows, supplier finance and sensitivity analysis
Case tasks documented here
  • Compute the total of the first bucket.
  • Compute the total of the second bucket.
  • Compute the total of the third bucket.
  • Compute the total of the undiscounted contractual cash flows.
  • Compute the difference between the total of the flows and the carrying amount.
  • What share of the trade payables goes through the finance provider, and why describe it?
  • Is the change in rates retained by management a reasonably possible change?
  • Compute the effect on profit or loss of the increase retained.
1

Facts and data

Inputs

  • Financial liabilities concerned, maturity buckets retained and liquidity risk management

    TextRequired

    BANK_LOAN_BOND_AND_TRADE_PAYABLES_IN_THREE_MATURITY_BUCKETS

  • Bank loan: contractual flows of the first bucket

    Number

    1,100,000

  • Bank loan: contractual flows of the second bucket

    Number

    1,050,000

  • Bank loan: contractual flows of the third bucket

    Number

  • Trade payables: contractual flows of the first bucket

    Number

    800,000

  • Trade payables: contractual flows of the second bucket

    Number

  • Bond: contractual flows of the first bucket

    Number

    40,000

  • Bond: contractual flows of the second bucket

    Number

    40,000

  • Bond: contractual flows of the third bucket

    Number

    1,040,000

  • Carrying amount of the financial liabilities in the analysis

    Number

    3,800,000

  • Total of the contractual flows according to the contracts (check)

    Number

    4,070,000

  • Concentration: payables with a supplier finance provider and diversification of sources

    Text

    PART_OF_THE_TRADE_PAYABLES_GOES_THROUGH_A_SINGLE_SUPPLIER_FINANCE_PROVIDER

  • Floating-rate exposure at the closing date

    Number

    2,000,000

  • Reasonably possible change in the rate (percentage points, case data)

    Number

    1 %

2

Supporting documents

Evidence

  • Documents obtained and referenced (amortisation schedules, contracts, statements of floating-rate debt)

    EvidenceRequired

3

Analysis of maturities and sensitivity

Analysis

IFRS 7 §39

  • Points examined: liquidity and market

    ChecklistRequired

    • Maturity analysis of the non-derivative financial liabilities and description of liquidity risk management
    • Flows of the analysis taken from the contract, without discounting (convention of the table)
    • Number and limits of the buckets set by judgment
    • Concentration with a supplier finance provider examined
    • Sensitivity analysis for each significant type of market risk
    • Effect on profit or loss and on equity, methods and assumptions
4

Calculations

Calculations

IFRS 7 §39

  • Total of the first bucket

    Calculation

    1,940,000

    Bank loan: contractual flows of the first bucket ; Trade payables: contractual flows of the first bucket ; Bond: contractual flows of the first bucket

  • Total of the second bucket

    Calculation

    1,090,000

    Bank loan: contractual flows of the second bucket ; Trade payables: contractual flows of the second bucket ; Bond: contractual flows of the second bucket

  • Total of the third bucket

    Calculation

    1,040,000

    Bank loan: contractual flows of the third bucket ; Bond: contractual flows of the third bucket

  • Total undiscounted contractual cash flows

    Calculation

    4,070,000

    Total of the first bucket ; Total of the second bucket ; Total of the third bucket

  • Difference: total contractual flows − carrying amount

    Calculation

    270,000

    Total undiscounted contractual cash flows ; − Carrying amount of the financial liabilities in the analysis

  • Effect on profit or loss (floating-rate exposure × change in the rate)

    Calculation

    20,000

    Floating-rate exposure at the closing date ; Reasonably possible change in the rate (percentage points, case data)

5

Judgment: reasonably possible change in the risk variable

Judgment

IFRS 7 §39

  • Change retained for the sensitivity analysis

    JudgmentRequired

    Change supported by market conditions and the history of the variable

    Change supported by market conditions and the history of the variable / Change to be reconsidered before publication

    Professional judgment: a reasonably possible change is an estimate of the entity; the percentage used in the case is data and is not a threshold of the standard.

  • Rationale: source of the change and period considered

    Text

    THE_FLOATING_RATE_MOVED_BY_AT_MOST_ONE_POINT_OVER_THE_LAST_THREE_YEARS

6

Items to document for the liquidity and market disclosures

Disclosure

IFRS 7 §39

  • Information to prepare

    Checklist

    • Maturity table by bucket and description of risk management
    • Sensitivity table: profit or loss and equity, assumptions
7

Conclusion

Conclusion

  • Maturity table reconciled to the total of the contracts, difference from the carrying amount, effect of the change retained and judgment on the change

    ConclusionRequired

8

Normative references

References

  • Normative references cited in this workpaper

    References

9

Checks and financial statement impact

  • Liabilities and buckets describedPass
  • Change judged and supportedPass
  • Total of the buckets = total of the contractsPass
Assets
0
Liabilities
0
Profit or loss
0
OCI
0
Equity
0