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SACCO INDUSTRY WATCH

'L? HUHQFHVEHWZHHQWKHROGDQG What prompted the was reactive rather than preemptive
QHZDFFRXQWLQJVWDQGDUG LQWURGXFWLRQRI,)56LQ and as such, credit losses were only
SACCOs? recognized when they were incurred.
Out of high public demand, SACCO STAR
engaged ICPAK’s Technical Services There was need to introduce prudent The new standard introduces the
(Accounting and Auditing Standards) management and reporting of risks Expected Credit Loss (ECL) model of
,@M@FDQ"/ "KH?-X@MCNQNSNCHRBTRR @RRNBH@SDCVHSG?M@MBH@KHMRSQTLDMSR
L@JHMFOQNUHRHNMRENQSGDRD?M@MBH@K
more on this pressing issue. So, IFRS-9 is a new accounting standard instruments as opposed to the
which seeks to replace International previously used Incurred Loss (IL)
IAS 39 CLASSIFICATION Accounting Standard (IAS) 39 on model.
Rule - Based ?M@MBH@KHMRSQTLDMSR

"NLOKDW@MCCH?BTKSSN@OOKX
Multiple impairement models Financial instruments are monetary (MQDRODBSSNBK@RRH?B@SHNMNESGD
Own credit gains and losses recognised contracts between parties. These are ?M@MBH@KHMRSQTLDMSRSGDQDVDQD
HMOQN?SNQKNRRENQE@HQU@KTDNOSHNM mainly loans to members in SACCOs four categories of recognizing and
(FVO) liabilities among other credit facilities and LD@RTQHMF?M@MBH@KHMRSQTLDMSRTMCDQ
"NLOKHB@SDCQDBK@RRH?B@SHNMQTKDR products which the SACCOs advance to the previous standard, IAS 39.
their customers.
IFRS-9 CLASSIFICATION These are;
Principle - Based Kindly expound on the Financial Assets At Fair Value
"K@RRH?B@SHNMA@RDCNMATRHMDRRLNCDK SUHYLRXVDFFRXQWLQJPRGHO 3GQNTFG/QN?S.Q+NRR%53/+
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One impairement models SACCOs Available-For-Sale Financial
Own credit gains and losses presented Assets (AFS)
in Other Comprehensive Income (OCI) The previous impairment model
for (FVO) liabilities used in provisioning was premised Loans And Receivables (LR)
!TRHMDRRLNCDKCQHUDMQDBK@RRH?B@SHNM on recognizing losses when a default
occurs. This means that the model Held-To-Maturity investments
(HTM)

IFRS-9 introduces two broad
BK@RRH?B@SHNMRENQ?M@MBH@K@RRDSR

These being;

Those measured at amortized
cost,

Those measured at fair value,
DHSGDQSGQNTFGOQN?SNQKNRRNQ
through other comprehensive
income

The salient requirements under
IFRS-9 are in the following
areas;

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%HM@MBH@K@RRDSR@QDBK@RRH?DCAX
reference to the business model
within which they are held
@MCSGDHQBNMSQ@BST@KB@RG?NV
characteristics.

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Nyandoro, during one of the trainings.

6| SACCO Star Magazine