"IFRS 7 Financial Instruments: Disclosures"

IFRS 7, titled "Financial Instruments: Disclosures," is an International Financial Reporting Standard issued by the International Accounting Standards Board (IASB). IFRS 7 sets out the requirements for disclosing information about an entity's exposure to risks associated with financial instruments and the nature and extent of those risks.

Key points and objectives of IFRS 7 include:

1. Scope: IFRS 7 applies to all entities that have financial instruments, including financial institutions, corporations, and other organizations. It covers a wide range of financial instruments, such as loans, derivatives, equity instruments, and debt securities.

2. Objective of Disclosures: The primary objective of IFRS 7 is to provide users of financial statements with information that helps them understand the entity's exposure to risks related to financial instruments and how those risks are managed.

3. Quantitative and Qualitative Disclosures: IFRS 7 requires both quantitative and qualitative disclosures. Quantitative disclosures include information about the carrying amount of different types of financial instruments, their fair values, and the extent of market risk, credit risk, and liquidity risk. Qualitative disclosures provide context and explanations for the quantitative data.

4. Risk Management Objectives and Policies: Entities are required to disclose their risk management objectives and policies, including how they identify, measure, monitor, and manage risks associated with financial instruments.

5. Fair Value Disclosures: For financial instruments measured at fair value, entities must provide information about the valuation techniques and inputs used in determining fair values. This includes the categorization of fair value measurements within a fair value hierarchy.

6. Sensitivity Analysis: Entities are often required to perform sensitivity analysis to assess the impact of changes in market conditions on their financial instruments. The results of this analysis should be disclosed.

7. Credit Risk Disclosures: IFRS 7 requires disclosure of credit risk information, including credit ratings, past-due information, and collateral held as security.

8. Liquidity Risk Disclosures: Entities should disclose information about their exposure to liquidity risk, including the contractual maturities of financial liabilities.

9. Market Risk Disclosures: Entities with significant market risk exposure, such as those using derivatives, should disclose information about market risk, including sensitivity to changes in interest rates, foreign exchange rates, and other market variables.

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