Financial Instruments Accounting

Financial institutions and treasury departments within corporates are typically active users or issuers of derivative instruments and financial products. The current accounting and disclosure requirements for these products are captured in NZ IAS 32, NZ IAS 39, NZ IFRS 7 and NZ IFRS 13 which are detailed and complex standards. However there is a new accounting standard on the horizon, IFRS 9, which presents revised guidance on the classification and measurement of financial assets, a new expected credit loss model for calculating impairment and includes new approaches to hedge accounting.

How we can help
Whether you are under the old standard or the new standard the KPMG team can assist you in accounting for financial instruments. Our team have extensive financial risk management experience coupled with deep technical knowledge, practical experience and an ability to balance technical areas of the standard with pragmatic realistic solutions.

We have real experience of helping some of New Zealand’s biggest bank and non-bank entities implement IFRS 9. Our New Zealand team have done extensive technical advice, impact analysis work and preparation work with clients and several pieces of IFRS 9 implementation work for clients. We have helped clients identify and implement strategies that take advantage of the opportunities in the new standard, look at ways to remove P&L volatility and make your accounting reflect your actual risk management strategies.

Our knowledge of financial risk and our understanding of financial products are key to making us ideally placed to help you with financial instrument accounting. This is because we think that you cannot effectively work on accounting for hedge structures without also having extensive experience in managing financial risks and have a deep understanding of products used to do that. Our interpretation of the standards will be pragmatic, will reflect that knowledge and will be focussed on reflecting the economic substance of your financial risk management strategies as well as being robust and auditable.