CIMA F3 Syllabus A. Financial policy decisions - Disclosure of financial risk - Notes ^{9 / 12}

Users of financial instruments need information about

• an entity's exposures to risks

• how those risks are managed

  as this information can influence a user's assessment of the financial position and financial performance of an entity

Classes of financial instruments and levels of disclosure

The entity must group financial instruments into classes appropriate to the nature of the information presented.

1) Statement of financial position

The following must be disclosed:

• Carrying amount of financial assets and liabilities.

• Special disclosures about financial assets and financial liabilities designated to be measured at fair value through profit and loss including disclosures about credit risk and market risk, changes in fair values attributable to these risks and the methods of measurement.

• Reason for any reclassification of financial instruments from one category to another.

• The carrying amount of financial assets the entity has pledged as collateral for liabilities or contingent liabilities.

• Reconciliation of movement in the allowance account for credit losses (bad debts) by class of financial assets.

2) Statement of profit or loss and other comprehensive income

The entity must disclose the following items of income, expense, gains or losses, either on the face of the financial statements or in the notes.

• Net gains/losses on financial instruments recognised in profit or loss by lAS 39 category (broken down as appropriate: eg interest, fair value changes, dividend income).

• Total effective interest income/expense (for items not held at fair value through profit or loss).

• Impairments losses by class of financial asset.

3) Other disclosures

• Accounting policy for the measurement of financial instruments.

• Credit risk management policy

• Aged debtor analysis

• The impact of adverse exchange rate movements on reported profit

• Description of each financial instrument designated as hedging instruments and their fair value at the reporting date.

• The nature of the risks being hedged.

• For cash flow hedges, periods when the cash flows will occur and when they will affect profit or loss.

• For fair value hedges, details of fair value changes of the hedging instrument and the hedged item.

• The ineffectiveness recognised in profit or loss arising from cash flow hedges and net investments in foreign operations.