Classification in IFRS9 considers the business model and cash flow characteristics of a financial instrument.
The classification process is to be executed at initial recognition.
In addition at any subsequent posting date till the maturity date of the asset is reached a "relassicification check" needs to be applied..
The solution provides different types of accounting category assignment processes, each taylor-made to individual needs depending on the business of the entity in question.
In general, the user can choose between fully automated processes and a semi-automated process. These processes mainly differ with regard to how the business model will be identified or assigned and how the SPPI test will be executed.
The selection of the appropriate taylor-made classification process will be driven by the complexity of the portfolio and business of the entity.
FlexFinance provides various ways of assigning the accounting category to financial assets and financial liabilities:
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It should be possible to assign the appropriate IFRS 9 category for attribute combinations of these criteria. In this case, a separate decision for every individual deal is not required. Individual deals are assigned to a portfolio during the import into the IFRS solution. Then the IFRS 9 category that has been configured for the portfolio will be assigned to an individual deal.
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Beside the pragmatic approach, the blueprint also covers a sophisticated approach. For this purpose, specific components are provided to derive the business model or SPPI criteria.
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