Page 32 - GTBank Annual Report 2020 eBook
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3.4 Cash and cash equivalents assets and their contractual cash flows
Cash and cash equivalents include notes and represent solely payments of principal and
coins on hand, unrestricted balances held with interest.
central bank of The Gambia, balances held
with other banks and Money market Financial assets not meeting either of these
placements. Cash and cash equivalents are two business models; and all equity
carried at amortised cost in the Statement of instruments (unless designated at inception to
financial position. fair value through other comprehensive
income); and all derivatives are measured at
3.5 Financial instruments fair value through profit or loss.
As permitted by the transitional provisions of An entity may, at initial recognition, designate
IFRS 9, the Bank restated the 2019 a financial asset as measured at fair value
comparative figures. Any adjustments to the through profit or loss if doing so eliminates or
carrying amounts of financial assets and significantly reduces an accounting mismatch.
liabilities at the date of transition were
recognized in the income statement, balance The Bank has undertaken an assessment to
sheet, opening retained earnings and other determine the potential impact of changes in
reserves of the current year. classification and measurement of financial
Consequently, for notes disclosures, the assets. The adoption of IFRS 9 did not result in
consequential amendments to IFRS 7 significant changes to existing asset
disclosures have also only been applied to both measurement bases.
the current and comparative years. Impairment Methodology
The adoption of IFRS 9 has resulted in
changes in our accounting policies for The IFRS 9 impairment model will be applicable
recognition, classification and measurement of to all financial assets at amortized cost, debt
financial assets and financial liabilities and instruments measured at fair value through other
impairment of financial assets. comprehensive income, lease receivables, loan
commitments and financial guarantees not
IFRS 9 introduces a new approach for measured at fair value through profit or loss.
classification and measurement of financial
instruments and a more forward-looking IFRS 9 replaces the existing ‘incurred loss’
Impairment methodology. impairment approach with an Expected Credit
Loss (‘ECL’) model, resulting in earlier
Classification and Measurement recognition of credit losses compared with IAS
39.
IFRS 9 requires financial assets to be classified Expected credit losses are the unbiased
into one of three measurement categories: fair probability weighted average credit losses
value through profit or loss, fair value through determined by evaluating a range of possible
other comprehensive income and amortised outcomes and future economic conditions.
cost.
The ECL model has three stages. Entities are
Financial assets will be measured at amortised required to recognise a 12-month expected
cost if they are held within a business model loss allowance on initial recognition (stage 1)
with the objective of which is to hold financial
assets in order to collect contractual cash and a lifetime expected loss allowance when
flows, and their contractual cash flows there has been a significant increase in credit
represent solely payments of principal and risk since initial recognition (stage 2). Stage 3
interest. requires objective evidence that an asset is
Financial assets will be measured at fair value credit-impaired, which is similar to the
through other comprehensive income if they guidance on incurred losses in IAS 39.
are held within a business model the objective
of which is achieved by both collecting The requirement to recognise lifetime ECL for
contractual cash flows and selling financial Annual Report 2020
Guaranty Trust Bank Gambia Limited www.gtbankgambia.com 30
