methodology for the application of the general approach under ifrs 9

​The application of the general approach under IFRS 9, which deals with the recognition and measurement of financial assets and liabilities, can be methodologically structured in several key steps:

1. **Classification and Measurement of Financial Assets and Liabilities**:

   - Identify the financial assets and liabilities.

   - Classify them based on their contractual cash flow characteristics and the business model for managing them.

   - Apply the appropriate measurement category: amortized cost, fair value through other comprehensive income (FVOCI), or fair value through profit or loss (FVTPL).

2. **Impairment Assessment**:

   - Establish criteria for recognizing credit losses.

   - Apply the expected credit loss (ECL) model, which requires estimating the present value of all cash shortfalls over the expected life of the financial instrument.

   - Differentiate between the three stages of impairment and recognize either a 12-month ECL or a lifetime ECL.

3. **Hedge Accounting**:

   - Identify hedging relationships and instruments.

   - Ensure that these meet the criteria for hedge accounting as per IFRS 9.

   - Measure and recognize hedge effectiveness and ineffectiveness.

4. **Derivative and Embedded Derivatives Assessment**:

   - Identify and separate embedded derivatives if they are not closely related to the host contract.

   - Measure derivatives at fair value through profit or loss.

5. **Disclosures**:

   - Prepare and present disclosures as required by IFRS 9, which include information about the classification, measurement, and impairment of financial assets and liabilities, and about hedge accounting.

6. **Transition Provisions**:

   - Understand the specific transitional provisions provided by IFRS 9.

   - Make necessary adjustments to the financial statements at the time of initial application.

7. **Continuous Monitoring and Updating**:

   - Regularly review the classification and measurement of financial assets and liabilities.

   - Update impairment calculations as new information becomes available.

   - Keep track of changes in hedging relationships and their effectiveness.

8. **Staff Training and Policy Development**:

   - Educate relevant staff about IFRS 9 requirements.

   - Develop and implement internal policies and controls to ensure compliance with IFRS 9.

9. **Integration with Other Standards**:

   - Understand and manage the interaction of IFRS 9 with other IFRS standards, such as IFRS 7 (Financial Instruments: Disclosures) and IFRS 13 (Fair Value Measurement).

10. **Documentation and Record Keeping**:

    - Maintain thorough documentation for audit and compliance purposes.

    - Ensure that records accurately reflect the classification, measurement, and impairment models used.

This methodology should be tailored to the specific needs and circumstances of each entity, considering the complexity and nature of its financial instruments.