COMPIRICUS Newsletter July 2019
Dear Sir or Madam,
"I never think of the future. It comes soon enough." That was Albert Einstein’s view. A more reasonable approach for a risk-conscious investment manager would integrate a forward-looking view and offer solutions that can automatically calculate robust investment scenarios, especially for large portfolios and complex financial instruments.
Our COMPIRICUS risk management experts partnered with our globally active customers in the insurance sector to develop just such a solution. In this issue, discover how our new solution works and why we teamed up with Bloomberg and "DerTreasurer" to develop it.
IDW ERS BFA 7 – Will German GAAP follow IFRS on the general loss allowance?
On November 28, 2018, the Banking Committee of the Institute of Public Auditors in Germany (IDW) issued a recommendation on accounting standards, in accordance with IDW ERS BFA 7, that aims to revise the method of calculating the general loss allowance on interest-bearing receivables through a general loss provision in accordance with the prudence principle laid down in Section 252 of the German Commercial Code (HGB). The recommendation would require the general loss allowance to be determined by comparing the nominal value of expected defaults with the present value of the risk premium contained in the interest rate charged to customers.
The German GAAP approach would not differ meaningfully from the IFRS 9 risk provisioning requirements that have been in force since 2018 for financial transactions, as the IDW is essentially requesting that German GAAP adopt the IFRS 9 assessment basis for determining the general loss allowance.
Notable in the IDW’s proposal is the short implementation period it recommends: application of the proposed standard would be mandatory as of December 31, 2020.
While the Banking Committee’s recommendations are directed exclusively towards banks (which have already criticized them as too invasive), recent discussions with the financial sector suggest a medium-term likelihood that insurers will also be subject to an expected loss model (or similar) for calculating impairment losses on their interest-bearing financial assets. Institutions that have traditionally reported under German GAAP will face the greatest burden in terms of new and complex requirements.
We have more than 20 years of experience as a sector specialist and technology expert in implementing complex financial markets accounting solutions under both IFRS and German GAAP. Given the vast number of projects we at COMPIRICUS have realized in the insurance industry, we’re intimately familiar with the opportunities that SAP’s TRM and CML modules provide, as well as the SAP add-on specifically developed for mapping expected loss models.
Any questions regarding the IDW’s recommendation (in accordance with IDW ERS BFA 7) and its consequences for your financial accounting? Get in touch with us:
+49 211 64949-300 oder Thomas.Buettner@compiricus.de
Bloomberg and COMPIRICUS are integration partners
In order to develop certified interfaces for treasury and asset managers that ensure interoperability between the SAP Treasury system and Bloomberg products, COMPIRICUS has teamed up with Bloomberg Finance L.P. as an official integration partner.
The COMPIRICUS Bloomberg interface offering currently includes:
Catch your interest? Reach out to us::
+49 211 64949-300 oder Howard.Chin@compiricus.com
Automatically calculate robust investment scenarios for large portfolios and complex financial instruments
The risk management experts at COMPIRICUS have teamed up with our globally active customers in the insurance sector to develop a solution that enables the fast and efficient generation of forecasts for financial instruments and the easy modification of market/investment scenarios and assumptions. The COMPIRICUS Investment Forecaster is a platform-independent application for all companies working with highly complex asset and liability portfolios, such as insurers, pension funds, investment companies and corporates. The SAP-HANA (XS advanced) technology-based software package completely replaces Excel-based solutions.
Catch your interest? Alexander Preuss is happy to answer your questions.
+49 211 64949-300 oder Alexander.Preuss@compiricus.com
Delivering your optimal solution
This has always been the standard by which we measure ourselves and our work. And that’s the way it’s going to stay in the future as well. In order to live up to this goal, we have formulated a vision statement as part of the continuous development of our corporate culture:
We use the brightest minds to create the best solutions.
In an effort to realize this vision and meet our own standards as well as those of our customers, we adhere to the COMPIRICUS corporate values every day.
- Keep on Moving
- Be willing to take risks
- Pull in the same direction
- Get to the bottom of things
- Accept responsibility