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Author's profile photo Falk Rieker

Standardization and Transparency Key to IFRS 9 Success

In 2014, the International Accounting Standards Board (IASB) issued its IFRS 9 Financial Instruments standards to replace IAS 39 and create a single approach to measuring and classifying a bank’s financial instruments. Banks and financial institutions were given four years to modify their systems and comply with these new standards – and that deadline is quickly looming. Come January 1, 2018, all must be compliant.

Needless to say, our banking and financial clients have made compliance with IFRS 9 a critical priority in 2016.  For many, getting to a place of compliance has required massive IT transformations or system modernizations; it’s a process that could take a few months or even years.

To help our customers meet the new regulatory demands, we have upgraded SAP’s Banking Services 9.0 to include an enhanced version of SAP Accounting for Financial Instruments (AFI); one that provides IFRS 9 enhancements in the areas of impairment, modifications and accounting for the own credit risk. For our customers not planning to move to 9.0 yet, we have down ported the enhancements also to 8.0.

AFI is integrated into Banking Services because we firmly believe that it helps to meet some of the main challenges banks face when undergoing a transformation. For example, IFRS 9 may be the latest regulation that banks and financial organizations need to comply with – but it certainly is not the last. With new regulations constantly emerging, AFI helps banks to maintain compliance by automatically aligning to any standards or needs.

Another challenge that banks and financial services organizations face is the consolidation of their IT systems. Standardizing decades of information scattered in databases around the world is no small feat; especially when each country and region has its own data privacy standards, reporting protocols, etc.  The integration of AFI functionality allows banks to centralize their accounting principles while still maintaining multi-GAAP capabilities. This may sound complex, but it’s simply an exercise in standardizing processes and creating visibility into all facets of an organization.

With this feature round-off, SAP Accounting for Financial Instruments and Banking Services Releases 8.0 and 9.0 are ready for IFRS 9 and our customers are more prepared than ever before.

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