Electronic Signature Legitimateness for Business Ethics and Conduct Disclosure Statement in UAE

How to eSign a document: electronic signature legitimateness for Business Ethics and Conduct Disclosure Statement in UAE

this is a lecture from open tuition to benefit from the lecture you should download the free lecture notes from open tuition com the last part of the chapter is gonna go through there and look at the disclosures now we talked about here hedge accounting and disclosures it's technically not really hedge accounting disclosures it's more disclosures to do with financial instruments in general so disclosed about financial assets disclosures about financial liabilities and the reason why it's there as a new standard so the IFRS 7 is effectively because of the banking crisis the financial crisis that took hold of the global economy at the back part 2007 and going into is it 2008 when it really gripped the world so to speak didn't it okay and a lot of the the reason behind it was obviously the risks that were taken by large financial institutions in terms of the level of borrowing that they allowed to maybe not so credit worthy individuals and because of that they were then a little bit less liquid than what they should have been and then following that the markets took quite a bit of a hit didn't it in terms of share prices bond markets unlike okay and one of the issues that was thrown at the world of accountancy was well hang on a minute you've got all your accounting which is complex enough okay and you know we've tried to simplify it from having a lot in the last few videos on hedging it's not that simple is it bought from the world of financial instruments and financial assets and financial liability they have tried to make it much more straightforward but the big issue there on top of that is you've got a number within your accounts whether it's a financial asset so it's an investment that you have insures whether that is classified differently from one business to another who would know McCabe's got a number as an investment what happens if you've got a low within your financial statements okay you've borrowed money or maybe you're a bank and you have lent money again you'll see from a bank's perspective having lent the money you've got your financial asset so all those if you like mortgage receivables and loan receivables or if you are the company that's borrowed the money you'll have huge amounts of financial liabilities won't we again you see a number on the financial statements do you see anything else now you do because what we have is IFRS 7 and it gives you a lot more disclosure think about it as PPE and a disclosure know we've got financial instruments and a disclosure notice and say you know for PPE all you see on the face of the statements of profit or loss is the carrying value of all of your property plant and equipment exactly the same from a financial instruments perspective you see the sum total all you financial assets you see the sum total all you financial liabilities but what are those financial liabilities represent what those financial assets represents as well well now you've got rules about what you should be disclosing okay and the reason why we have it is to go through there and give the shareholders more information so that they can understand the risks that arise from this complex area of accounting which is financial instruments you know if you've got all of these investments insures for investments in debt as your financial assets the issue there is that well those investments insures what's the risks of those values of the share prices will change if you've got the investment in debt what's the risk that your customer will not be able to pay you okay so we start to have disclosed about credit risk we start to have disclosures about is it market risk the changes in the price credit risk is the ability of the people who've you lent the money to to pay you back if you're looking at it from a financial liability perspective and your your loans that you've taken out you may have various different loans and the Treasury Department has entered into they're all bundled together within the financial statements but within the notes of the accounts it's start talking about the level of risk in terms of the repayments and therefore your level of liquidity risk have you got a fish a sufficient budget in place to go through there and to be able to pay back that loan not just the the interest but also the capital repayments as well okay so what the standard has done is its insure that there isn't just a numerical breakdown of all of the financial assets and financial liabilities by different categories so whether that's fair value through profit or loss or all the other various different categories that we have whereby gains and losses may be taken to other comprehensive income or may be as well as some form of amortized cost methodology as well okay there are quantitative disclosures that split things out but what the standard has really done is focused upon these qualitative characteristics or qualitative disclosures and by their what we need there is a little bit more description okay and description there revolves around explaining what your exposure to risk is you know if you've lent money to your customers how creditworthy are those customers okay clearly if there is a change in the credit worthiness you would need to report that as part of your qualitative disclosures okay you then need to go through there and disclose as well if there have been any changes in your exposure okay why has that arisen okay has there been an increase in liquidity risk because you're trading suffered that therefore as men you have less cash available to pay off your loans or is there an economic downturn as man that a lot of the businesses that you have lent to have been downgraded with regards to their credit ratings okay you can't expect the shareholders to find this out you have to give the information in terms the disclosures in the notes and then likewise as well one of the important aspects and sort of why it links into hedging that we spoke about earlier it's all about how do we manage the risk do we enter into hedging transactions if so what is the exposure that we are protecting ourselves against what the changes in the instrument what's the changes in the item and and how has that gone through the unaffected the financial statements if you don't hedge why not okay or if you don't do anything to manage the change in risk why have you taken that stance okay you can argue that businesses shouldn't be hedging in terms of risks because the shareholders themselves will own a well diversify portfolio of shares and therefore they are managing their own personal risk and it's not up to the directors to manage the risk of that particular business book that's something for another day okay so the key thing that you've got here is to note that the risks that we are trying to give you the disclosure about so the credit risk the liquidity risk in the market risk and then that we have qualitative and quantitative disclosures and the focus is much more now on that qualitative disclosure okay giving more information to the users of the accounts but what like we've seen in that previous chapter when we started talking about the Global Reporting Initiative and sustainability and integrated reporting into how sustainability can be integrated with all the aspects within the business so so if you like managing risk that we have here all of a sudden we've got a lot going on within those financial statements and it could be argued that we've got too much within there but that's not for us to worry about for now you just need to be happy with the reasons behind IFRS 7 as a standard and what you're expected to include within as your disclosure other map that's it from this chapter and that's it for this first part of the syllabus