Learning Objectives:

  • Understand the impact of IAS 39, IFRS 7, IFRS 9, and related standards.

  • Analyse how asset valuation and provisioning policies affect bank results.

  • Evaluate disclosure practices for financial instruments.

7.1 Key Accounting Standards for Banks

The University of Malta course covers “Accounting standards associated with Banking (IAS 39, IFRS 7 and IFRS 9 amongst others)” . The HKU Business School course examines “accounting and disclosure rules for financial instruments” .

IFRS 9: The current standard for financial instruments, replacing IAS 39. Key features include:

  • Classification and measurement based on business model and cash flow characteristics.

  • Expected Credit Loss (ECL) impairment model.

  • New hedge accounting requirements.

7.2 Fair Value Accounting and Disclosure

The HKU Business School course notes that “the financial statements of financial institutions are increasingly based on fair value accounting” . Key disclosure areas include:

  • Fair Value Hierarchy: Level 1, Level 2, and Level 3 fair value measurements.

  • Risk and Estimation Sensitivity Disclosures: Providing insight into measurement uncertainty.

7.3 Disclosure Evaluation

Students learn to “evaluate the bank management’s disclosure practice and potential for mis-reporting” . This includes identifying:

  • Weak Disclosures: Lack of transparency in key risk areas.

  • Potential Misreporting: Ethical dimensions of financial reporting.

PreviousNext