Background and Solution

IFRS 9 requires impairments for Trade Receivables to be calculated on an expected credit loss basis (ECL). The calculation of ECL must have the following attributes :

• Probability-weighted,so not biased towards worst or best case scenarios
• Incorporate the effect of time value of money, and
• Make use of reliable information including the use of historical, current and forward-looking Information

For most companies this will require a significantly different approach to impairment calculation and may require some new skills to apply competently.

   How does it work?

Once activated, the ECL.Calculator will ask you to upload certain of your historical customer data, e.g. monthly debtors aged analysis , write-offs experienced , recoveries achieved etc. .That’s it, the ECL.Calculator does all the rest!

The Output

The ECL computation is delivered to you in a report which includes the information an entity is required to provide in its financial statements.The report will also include appendices that will include information which your auditor will require to audit the outcome such as a summary of:

• The method applied to develop the provisions matrix
• The key inputs utilized
• User data uploaded, and
• The outcomes of regression analysis utilized to adjust for forward-looking Information.

We are a multidisciplinary team of JSE-Accredited IFRS specialists with broad experience in assisting listed companies, multinationals and large, state-owned enterprises with their financial reporting.

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