Earlier, he was a vice president at Harvard Management Company, responsible for information technology venture investments, and a consultant with McKinsey & Co. Perreault received a Bachelor of Science in mechanical engineering from Rensselaer Polytechnic Institute, summa cum laude, and a Masters of Business Administration from the Harvard Business School where he was a Baker Scholar. Under IFRS 9, one important condition for a financial asset to qualify for amortized cost classification is that the financial asset must meet the “SPPI” contractual cash flow characteristics test.. IFRS 9 establishes principles for the financial reporting of financial assets and financial liabilities. She returned to the India office and became a Team Lead. Justin Perreault is a General Partner of Commonwealth Capital Ventures. La norme IFRS 9 entraîne trois modifications majeures. Modern Liquidity Management for Financial, Legal and Fiscal Purposes”. contractual cash flows and selling financial assets: If a If you continue to use this website without changing your cookie settings or you click "Accept" below then you are consenting to this. The session discusses the examples of using the amortised cost concept As a practitioner, he built sales teams and derivatives businesses at Lehman Brothers, Bankers Trust, and First Union/Wachovia. Waugh has over 25 years of experience in building and leading entrepreneurial ventures. For instance, an entity can define more than one business model however, the challenge would be defining the various business models that would be consistent with the company’s strategy and risk appetite. As explained in the June edition of Business Edge, the classification decision for non-equity financial assets under IFRS 9 is dependent on two key criteria: 1. the cash flows only when an event occurs that is extremely rare, highly abnormal, and Mr. Pettinato has more than 25 years of experience managing and developing technology solutions for treasury, trading, risk management, accounting and post-trade processing of derivatives and capital markets products. Application guidance. Other leadership positions include: Director of Human Resources & Administration at APAX, a global private equity group, where she had a dual role in establishing the firm’s U.S. HR & Administration function and in HR consulting for the firm’s portfolio companies; Managing Director, Human Resources at Scient (now part of Razorfish), where she guided the IT consulting company through periods of tremendous growth, contraction and a merger; Director of Management & Organizational Development for AIG’s Life Insurance Division, comprising 15,000 employees across 50 countries; and Manager of Human Resources at Knight-Ridder Financial (now part of Thomson Reuters). All Signs Point to Another Bubble in Commodities, U.S. Treasury Plays its Card and Asks for Exemption of Fx Swaps & Forwards from Dodd-Frank. Mr. Mitchell began his career as a civil servant in the UK before spending 19 years with IBM in the UK and USA. With over 20 years of establishing and reshaping global HR departments, Ms. Behncke Colyer brings a strong track record of aligning business practices with corporate goals, strategies, and values. is not limited to: - Although the objective of an entity’s business model may be to There are certain flexibilities allowed under the new standard. He has particular interest in and experience with enterprise application, infrastructure software, and Software-as-a-Service (SaaS) business models. when the Mr. Brimfield brings with him a robust understanding of the power of SaaS delivery and treasury technology. financial asset if it could only have a de minimis effect on the contractual That would be even better to understand the changes. As a manager, Aayushi said her philosophy is simple- she treats her team as equals. the entity undertakes to achieve the objective of the business model. •       A each reporting period and cumulatively over the life of the financial flows over the life of the instrument are more likely to be solely principal recognizes a financial asset, it classifies based on the entity’s, Fair Mr. Feigelson also sits on the Board of the Foreign Policy Association. Mr. Haberler continues to lead Reval’s treasury services business and serves as a treasury expert in the global banking market. Justin Brimfield is Chief Marketing Officer at Reval, where he focuses on corporate strategy, inclusive of buy, build or partner analysis, and strategic marketing initiatives across the global organization. (FVTPL) as advised in, - the contractual terms of the financial asset give rise IFRS 9 also retains the option for some liabilities, which would normally be measured at amortised cost to be measured at FVTPL if, in doing so, it eliminates or reduces an accounting mismatch, sometimes referred to as ‘the fair value option’. Compare a financial instrument with an interest rate that is reset to a higher Before NaviNet, he was the U.S. President and CEO of Wincor-Nixdorf, a $2.6 billion firm that is focused on the ATM and POS marketplace. An entity can classify an instrument at amortized cost if contractual cash flows are solely payments of principal and interest and if the business model is to hold instruments to collect contractual cash flows (‘business model test’). It is not surprising to find more than 20 options or combinations for classifying or measuring financial assets. prepayment amount substantially represents the nominal contractual amount and Reval is committed to high quality. A Prior to Phase Forward, Weismann was CFO for four northern California-based software companies including Inxight Software, a private text search engine company, Kabira Technologies a private communications software company, NONSTOP Solutions, a private inventory management software company and Forte Software, a public application development tools company, where he led the IPO in 1996. At Reval, we respect, trust and support each other. :- An IFRS 9 introduces a two-step approach to determine the classification of financial assets: 1. Business model assessment and 2. Dr. Steven W. Kohlhagen has been involved in the derivatives markets for over 30 years as an academic, a practitioner, and a Board member. The session discusses the treatment of Financial Assets as to the application of Business model test for the use of Amortised cost method A cash Further equity issuances may be needed, with the potential for greater pro-cyclicality on lending and provisioning owing to IFRS 9. Introduction 2 1 Business model criterion 3 2 Assessing the SPPI criterion 8 3 Investments in equity instruments 15 4 Financial liabilities 18. Mr. Ewing holds a Bachelor of Arts degree in Economics, magna cum laude, from Yale University and an MBA from Stanford University. Waugh was awarded the 2004 Technology Award for Entrepreneurship from the Entrepreneurship Forum of New England. The challenge comes from the principle-based nature of IFRS 9, which includes qualitative components of credit risk. index specific reaches a particular level. consider the potential effect of the contractual cash flow characteristic at Dr. Kohlhagen was also honored as an inaugural member of Risk Magazine’s first “Derivatives Hall of Fame” in 2002. – IFRS 9 does not define financial instruments. Fundamentally, the classification of financial assets under IFRS 9 depends on two criteria: the contractual cash flow of the instrument and the entity’s business model for managing its financial instruments. While it isn’t possible to learn how to be jolly, Rey has some excellent advice to those new to implementation consulting. IFRS 9 creates business-wide challenges for organizations. In his capacity as PricewaterhouseCoopers Global and US Advisory Leader for the Energy, Utility and Mining industry sectors, he advised US utilities on business strategy, financial and enterprise risk management and financial and management reporting. Mr. Brimfield graduated from the University of Rochester with Bachelor of Arts degrees in Economics and Political Science. D’Amore’s venture investing is targeted at the software industry. As a manager, Alexander places importance on creating a work environment that promotes inventive and fresh ideas. consider the potential effect of the contractual cash flow characteristic at the accrued (but not paid) contractual interest, which may include reasonable on. The reason for the sales (such as credit deterioration). After joining in 2007, Aayushi watched Reval’s India entity grow from 10-15 employees to over 100 employees. She gives them freedom and avoids micromanaging. At the time, most of Reval’s teams were “risk guys” and they were looking for someone with expertise in cash services. Brad Waugh was the President and Chief Executive Officer of Tunstall Americas, a world leading provider of telehealthcare solutions. Prior to PwC, he built KPMG’s treasury consulting practice, integrating advisory, assurance and tax practices. Under his leadership, Reval introduced a true Software-as-a-Service solution, which has since evolved from a best-of-breed financial risk management offering to a next generation, all-in-one SaaS for enterprise treasury and risk management. Even before the crisis began, there was evidence that the IFRS 9 models some firms were using just weren’t strong enough to deliver the accuracy needed. financial asset meets the contractual cash flow condition but does not do so IFRS 9 Business model Examples- To collect the contractual cash flows, IFRS 9 Business model Examples- For both collecting contractual cash flows and selling financial assets, IFRS 9 Business model Examples- solely (or not solely) payments of principal and interest. receivables through factoring or securitization programs. After working for four years in Reval’s India office, Aayushi went on international assignment to New York for about a year and a half. Building on his financial and enterprise risk management career, his current efforts as Managing Director at Perception Advisors are focused on assisting corporations to increase revenue and reduce costs and risks in response to climate change and other sustainability challenges. instrument. Napier Park separated from Citigroup’s alternative investment arm, Citi Capital Advisors (“CCA”), in February 2013. Dr. Kohlhagen’s career in the field of derivatives began in academia as a professor at the University of California, Berkeley. A business model refers to how an entity manages its financial assets in order to generate cash flows. In 2000, Waugh founded Watch Hill Partners, Inc., a company focused on CRM optimization and mobility of Fortune 1000 companies. Mr. Cohen is a frequent speaker and writer on issues important in his areas of expertise. entity acquires or originates the financial asset with a premium or discount on Earlier in his career, Mr. Brimfield built and led Thomson’s fixed income consulting business, servicing corporate treasurers and CFOs. Vancouver BC, Canada, At Thomson Reuters, Reynaldo worked with Reval on a shared client. Willibald Rieder studied Technical Mathematics at the Technical Vienna University of Technology and then worked as a software developer. in Industrial & Organizational Psychology from New York University. entity initially recognizes the financial asset, the fair value of the prepaid IFRS 9 for corporates Are you good to go? “We are a team on a mission, all working together for successful implementations.” Being on a consulting team goes beyond the eight to five work day, but Rey has mastered juggling his projects, prioritizing, and managing his time both professionally and personally. At Lazard, Mr. Rana was responsible for equity and debt investments in financial- and related business, as well as information services investments. . rate if the debtor misses a particular number of payments to a financial First, Rey believes that impeccable customer service skills are crucial. Please type "50" in the field above. His thought leadership extends across treasury management to derivative reform and accounting regulations under both FASB and IASB. prepay a debt instrument before maturity is eligible to be measured at Our experts are known for looking at problems in new ways and for doing things beyond traditional ways. collecting In order to be compliant with IFRS 9, banks have to develop comprehensive frameworks answering complex an extensive data requirements, model adjustments required to calculate lifetime expected credit loss and forward looking behaviour. He has over 20 years of experience in financial management, operations and analysis. equivalent) in Psychology from the University of Cologne and a M.A. Ms. Cibik holds an MBA from Harvard Business School and a Bachelor of Science degree in Industrial Engineering from Bogazici University, Istanbul, Turkey. only as a result of a contractual term that allows (or requires) the issuer to Once again, the principle implied in the accounting standard will require some further interpretation. According to IFRS 9, When an entity first recognizes a financial asset, it classifies based on the entity’s business model for managing the asset and the asset’s contractual cash flow (SPPI test) characteristics, as further described below. former, classification as other than holding for collection, or holding for IFRS 9 responds to criticisms that IAS 39 is too complex, inconsistent with the way entities manage their businesses and risks, and defers the recognition of credit losses on loans and receivables until too late in the credit cycle. He has focused his investment activity in the Northeast since establishing Hambro’s office there in 1982. Perreault has more than 15 years of venture capital and operating experience in information technology industries. Prior to that he was President and Chief Executive Officer of NaviNet, a leader in unified patient information management (UPIM). At Bankers Trust, he was founder of the Market Transaction Group (Derivatives Options Products) and Managing Director, Money Market Sales and Trading, Origination and Distribution. She loves to be challenged and is motivated by meeting deadlines and delivering the expected product, whether it’s for a client or a colleague. business model test, in that they are held to collect contractual cashflows and these cashflows are solely payments of principal and interest (‘SPPI’). entity’s business model for managing financial assets is a matter of fact and financial assets using multiple contractually linked instruments that create not merely an assertion. In 2000, Mr. Haberler led ZoSo’s acquisition of ecofinance GmbH, growing the company’s banking and corporate treasury business until Reval’s acquisition of ecofinance in 2010. Prior to joining Reval, he was Senior Vice President at Thomson Reuters, responsible for the Corporate Treasury Services business unit. By continuing browsing you agree with our use of cookies. Patrick Cannon is Executive Vice President, Client Services at Reval, where he oversees global professional services and client support teams. She also served in senior client engagement and consulting roles at management consulting firms McKinsey & Company and Oliver Wyman, respectively. and interest payments on the outstanding principal amount due to the In making this determination, an entity must Mr. Rana joined Old Lane from Lazard Alternative Investments, where he was a Managing Director of the firm and a Principal of Lazard Technology Partners. For banks and other companies with significant financial assets, this would be a major exercise and it would require a robust system of monitoring these assets going forward. future majorly result of following issues: Factoring and securitization of trade receivables-. Such relevant evidence includes, but In the first case, contractual cash At FNX Solutions, Mr. Cannon created and led the client relationship business, managing a global team of client relationship managers, business analysts and software developers. The assessment of a business model is based on how key personnel actually manage the business, rather than management’s intent for specific financial assets. He develops personal relationships with all of his reports to encourage their confidence. On the day to day, Alexander values teamwork, but also stresses the importance of individual responsibilities and contributions because he believes that success comes from the combination of all three. Ce schéma donne la synthèse des trois modèles de comptabilisation dans la norme IFRS 9, en adéquation avec la logique de gestion de linstrument. This is to prevent spambot entries. Duygu Cibik is Executive Vice President, Chief Customer Success Officer at Reval, where she leads the Customer Success Management (CSM) function, helping clients achieve success using Reval. D’Amore is a graduate of Northeastern University (summa cum laude), 1975, and the Harvard University Graduate School of Business Administration (Baker Scholar), 1980. Prior to joining Commonwealth, Perreault was COO and later CEO of Object Design, a publicly held software company. financial asset meets the contractual cash flow condition but does not do so Example 1 An entity holds investments to collect their contractual cash flows. He also worked as a Vice President at Chemical Bank and at First Pennsylvania Bank. Costello & Associates, Inc. (a Y2K solutions firm) to Covansys (now CSC). In 2011, Rey was Reval’s first Vancouver employee and he had to build a team in Canada. •       If a relationship between late payments and an increase in credit risk. Key differences between IFRS 9 and IAS 39 are summarised below: Classification and measurement of financial assets IFRS 9 replaces the rules based model in IAS 39 with an approach which bases classification and measurement on the business model of an entity, and on the cash flows associated with each financial asset. In software engineering, it’s important to keep up with the rapidly changing technology so Aayushi is always reading and learning more to try and stay one step ahead. collection and sale, would likely be appropriate. Extending his advocacy beyond the corporate environment to the communities they serve, Mr. Okochi leads his company’s corporate responsibility program, Reval Cares, and sits on the boards of the non-profit organizations, Little Kids Rock and Be The Match®, a National Marrow Donor Program®. IFRS 9 EXAMPLES AND EXERCISES Acknowledgement This material is based on IFRS 9 (published by IASB) and Get ready for IFRS 9 (published by Grant Thornton) Required For Examples 1 to 7, determine the objective of the business model. He is well known in the markets as the co-creator of the widely used Garman Kohlhagen pricing model, the formula for estimating the value of a European call option on foreign exchange. He particularly liked that he had the opportunity to work on new international banking projects. He joined Reval after nearly a decade at EXIS Consulting, Inc., a leading financial software provider of fixed income trading systems, where he headed product development and operations. available at the date of the assessment. Patrick brings over 16 years of experience in client-facing roles, having led key project and relationship management initiatives for start-up and growth-stage companies. September 2017. Thus an entity’s For example, banks may need to revisit their ALM policies/strategies and consider impact to IFRS 9. As advocate of the customer, Ms. Cibik manages the global customer success management team and the client support functions to keep clients fully engaged and continually experiencing the full value of their investments in Reval. the contractual nominal amount; the contractual cash flow characteristic does not affect the classification of the It is determined at a level that reflects how groups of financial assets are managed rather than at an instrument level. At Thomson Reuters, he was involved in the acquisition of Selkirk Technologies, a Vancouver-based provider of treasury products and services. His senior roles also include President & CEO of DACG, a NASDAQ-listed global consulting group, for which he raised $5 million in private equity; and Group Director and Senior Vice President at Equifax in Europe, where he led sales, marketing and M&A with over a thousand direct reports. If the He is responsible for providing excellence in post-sales Client Services, through the delivery of industry-leading best practices. IFRS 9 seems to have taken a more strategic or broader approach as the business model test requires companies to assess the nature of their business and how it allocates its financial assets and not just by simply establishing the nature and risk of the asset itself. term are only payments of principal and interest on the amount of the types of transactions, an issuer may prioritize payments to holders of With their positive spirit, they push themselves to help clients, partners and co-workers achieve outstanding results. contractual cash flows, the entity must determine whether the contractual cash If an instrument fails to meet both criteria, then the financial asset should be measured at fair value. Weismann began his career with Peat, Marwick, Mitchell (now KPMG) in both audit and consulting groups and was licensed as a CPA in Massachusetts. They see new opportunities and readily take action, even on the toughest challenges. The Standard includes re­quire­ments for recog­ni­tion and mea­sure­ment, im­pair­ment, dere­cog­ni­tion and general hedge accounting. If he needs to go watch his son’s badminton tournament, then he plans accordingly. entity acquires or originates the financial asset with a premium or discount on Purpose of this document 1 Classification and measurement 2. Contents. IFRS 9 is in force as at 1 January 2018. He is a graduate of the University of California at Berkeley, where he earned a Bachelor of Science in Genetics. The entity measures such assets at amortised cost. The derecognition model in IFRS 9 is carried over unchanged from IAS 39 and is therefore not considered further in this paper. He has also served on the boards of the RI Convention Center Authority, the Narragansett Bay Commission, ArcStream Solutions (sold to Keane) and Blue Cross & Blue Shield of Rhode Island. cash flows only when an event occurs that is extremely rare, highly abnormal, and If a financial Now, he manages a team of seven. Mr. Pettinato holds a Bachelor of Science degree in Computer Science from Syracuse University and an MBA with honors from Baruch College’s Zicklin School of Business. activity. Previously, in Massachusetts, in roles as CFO, COO, and EVP, Corporate Development over seven years for Banyan Systems, Weismann was instrumental in its growth from $3 million to $130 million and its IPO in 1992. At Blue Cross & Blue Shield, Waugh served a short time as the acting CIO. The cookie settings on this website are set to "allow cookies" to give you the best browsing experience possible. highly unlikely. characteristic is insignificant. Learn more Accept. financial asset if it could only have a de minimis effect on the contractual Most recently, he served as SVP & CFO for Phase Forward, a public provider of data management solutions for clinical trials and drug safety and recently acquired by Oracle. He holds a Bachelor of Arts in Economics from Saint Joseph’s University. outstanding principal evaluating the cash flow that could arise before and Peter Haberler brings over two decades of entrepreneurial expertise to his role at Reval, where he helps banks deepen their relationships with corporate treasury clients by using innovative treasury services technology. There he was part of the senior team that helped to grow the company to become the leader in its market segment and take the company public on NASDAQ.