Webinar to reveal how to calculate expected credit losses during Covid-19

i9 Partners co-founders Rosh Segal and Laurence Milner go beyond the requirements of IFRS 9.

On 10 September, CFO South Africa, in partnership with IFRS 9 compliance experts i9 Partners, will be hosting a webinar that examines how finance departments are grappling with the requirements of IFRS 9 during Covid-19. 

In this instructive webinar, i9 Partners co-founder and director Rosh Segal will demystify the current IFRS 9 landscape and reveal which essential factors to consider when calculating expected credit losses (ECLs). 

Etion group financial controller Nerishini Naidoo will discuss how her company overcame its challenges with ECLs, and i9 Partners co-founder and director Laurence Milner will explain the approach that i9 Partners took at Etion in 2019, and how it would now be adjusted to include Covid-19 scenarios. 

Laurence explains that, if finance teams aren’t implementing IFRS 9 properly, they’re at risk of auditors rejecting their financial statements or having it slip through the cracks this year and show up in the next year. “Suddenly you have to go about revising your financial statements and going back to the users of your financial statements to tell them that you didn’t do it right the previous year.” 

He says there’s no doubt, because of the sensitivity around the state of the economy at the moment and the impact it has on credit risk, that everyone is looking at IFRS 9 a lot more closely, especially auditors and the users of the financial statements. 

“Users are looking to see what the IFRS 9 provisions are going to be, what are your expected credit losses, what your losses have been, and what are they going to be going forward as an indicator of how your business is coping under Covid-19. So if you don’t have a handle on this, you’re at risk of being under scrutiny and people not trusting all your numbers in your financial statements.”

Rosh adds that with preparers of the financial statements and CFOs being required to take responsibility for the numbers in the financial statements, they carry significant risk by not getting the numbers right and not being sure that they’ve adopted the right techniques to back up those numbers. 

“This webinar is about how we grow ourselves as CAs to understand credit risk in all the elements of our business and through measurement, which is a requirement at the end of each financial year, to learn from that and make decisions to manage our credit risk better within our businesses,” he says. 

Instead of having a cold discussion about the rules around IFRS 9, Rosh and Laurence will be sharing some of the logic behind it. “The whole of IFRS 9 relates to credit risk and credit losses,” he says. “To understand the background and to make it all come together, you need credit risk experts who understand credit, have worked with it and know how to apply it in the real world.” 

He explains that what makes this such a unique opportunity for CFOs is that they won’t get this kind of insight from university lectures or courses that talk about the requirements of IFRS 9. “We’re going to talk about understanding what credit risk is, how it impacts your business and how to measure it.”

“IFRS 9 is an accounting requirement for anyone following IFRS standards, but because of its technical nature, it’s a challenge that involves a lot of non-traditional accounting skills, so it can be challenging for CFOs who have not been trained in the aspects of IFRS 9,” Laurence says. 

He explains that the nature of IFRS 9 is that it has to be a forward-looking measure of credit-risk, so it has to take into account what the expectations are, or the economy, and what the impact of that is on the credit risk environment. “As a result of that, Covid-19 has turned all the measurements that we’ve been using for the past few years on their head. And that’s why, as of today, IFRS 9 presents a whole lot of new challenges to any CFO who has to report over it.”