IFRS 9 audit program for classification and measurement:
Audit program
Check if management has done any assessment
to see whether the financial assets meets the
SPPI criteria (Refer SPPI assessment checklist
attached).
If the financial assets meets the SPPI criteria, has
management performed the business model test
to see if the financial asset is merely SPPI or is it
held for sales (Refer Business Model assessment
checklist attached).
Obtain complete list of products from the client
and assessment done by client for key product
and variation and check whether management
assessment is appropriate or not.
For Islamic products such as Murabaha,
Mudaraba Wakala etc., check whether
management assessment is appropriate or not?
Has management documented for each product
their assessment of classifying each financial
asset into the respective classification as per IFRS
9.
For Sukuks and Bonds, share the samples with
iRadar to confirm whether it meets the SPPI
criteria.
For any future change in the classification of the
financial asset, obtain rationale from
management to understand how the business
model has changed and hence the classification.
Audit team comments