Software-as-a-Service (SaaS) provider Reval said that Deloitte Australia has implemented the group’s credit value adjustments (CVA) solution to increase automation and efficiency in challenging calculations required under International Financial Reporting Standards (IFRS) 13.
IFRS 13, effective for accounting periods beginning on or after 1 January 2013, requires the fair value of derivatives to be based on a reasonable ‘exit price’, the price that would be received to sell an asset or paid to transfer a liability.
To achieve compliance with the standard, companies will be required to incorporate the appropriate credit risk into financial instrument valuations. The impact of IFRS 13 will be significant as CVAs in fair value calculations may cause greater income statement volatility and potentially increase hedge ineffectiveness.
“We chose Reval as our strategic partner for their deep expertise in financial instruments and SaaS technology, and recently enhanced our solution with their CVA capabilities,” said Steven Cunico, partner at Deloitte Touche Tohmatsu. “The application of CVA is an evolving subjective area where corporations should consult their auditor or accounting advisors for guidance. Using Reval´s solution, we are able to gain efficiency through automating the complex calculations required under IFRS 13.”
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