G) FUNCTIONAL AND FOREIGN CURRENCIES The consolidated financial statements are presented in Canadian dollars, which is our functional currency. Assets and liabilities denominated in foreign currencies are translated into Canadian dollars at rates prevailing at the balance sheet date. Revenue and expenses in foreign currencies are translated at the average exchange rates prevailing during the period. Realized and unrealized gains and losses on foreign currency positions are included in non-interest income. H) PROVISIONS AND CONTINGENT LIABILITIES Management exercises judgment in determining whether a past event or transaction may result in the recognition of a provision or the disclosure of a contingent liability. Provisions are recognized in the consolidated financial statements when management determines that it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated, considering all relevant risks and uncertainties. Management as well as internal and external experts may be involved in estimating any amounts required. The actual costs of resolving these obligations may be significantly higher or lower than the recognized provision. I) SPECIFIC ACCOUNTING POLICIES The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements, except as noted. To facilitate a better understanding of our consolidated financial statements, the significant accounting policies are disclosed in the notes, where applicable, with related financial disclosures by major caption:
Note
Topic
Note
Topic
2 3 4 5 6 7 8 9
Financial instruments
16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
Capital stock
Acquisition
Share-based payments
Cash resources
Non-controlling interests
Securities
Contingent liabilities and commitments
Securities sold under repurchase agreements and purchased under resale agreements Loans, impaired loans and allowance for credit losses Financial assets transferred but not derecognized
Employee future benefits Income taxes Earnings per common share Related party transactions
Property and equipment
Interest rate sensitivity
10 11 12 13 14 15
Goodwill and intangible assets Derivative financial instruments
Interest income
Fair value of financial instruments Financial instruments - offsetting
Other assets
Deposits
Risk management
Other liabilities
Capital management
Debt
Subsidiaries
J) CHANGES IN ACCOUNTING POLICIES Conceptual Framework for Financial Reporting
In March 2018, the IASB issued a revised version of the Conceptual Framework for Financial Reporting which assists the IASB in developing IFRS standards and serves as an accounting policy guide when no IFRS standard applies. The amendments provide revised definitions and recognition criteria for assets and liabilities, and guidance on different measurement bases. The IASB also issued amendments to IFRS standards to refer to the revised framework. The revisions were effective f or CWB’s fiscal year beginning November 1, 2020 and had no significant impact on our consolidated financial statements. Interest Rate Benchmark Reform – Phase 1 Amendments On November 1, 2020, we adopted Phase 1 amendments to hedge accounting requirements in IFRS 9 Financial Instruments (IFRS 9), IAS 39 Financial Instruments: Recognition and Measurement (IAS 39) and IFRS 7 Financial Instruments: Disclosures (IFRS 7), which modify certain hedge accounting requirements to provide relief from the effect of uncertainties created by Inter-bank Offered Rate (IBOR) reform prior to the transition to alternative interest rates. Adoption of these amendments had no impact on our consolidated financial statements. These amendments will apply until IBOR-based cash flows transition to new risk-free rates or when the applicable hedging relationships are discontinued. Our accounting policies related to hedge accounting are described in Note 11. At October 31, 2021, we had no hedging relationships that reference IBORs with a maturity date which extends beyond the anticipated date of IBOR reform.
K) FUTURE ACCOUNTING CHANGES
A number of standards and amendments have been issued by the IASB, and the following changes may have an impact on our future financial statements.
Interest Rate Benchmark Reform - Phase 2 Amendments In August 2020, the IASB issued Phase 2 amendments to IFRS 9, IAS 39, and IFRS 7 to address ongoing IBOR and other interest rate benchmark reform. Phase 2 amendments focus on accounting and disclosure matters that will arise once an existing benchmark is replaced with an alternative benchmark rate. The amendments provide practical expedients if contract modifications result directly from IBOR reform and occur on an economic equivalent basis. In these cases, changes may be accounted for by updating the effective interest rate. Existing hedging relationships are not required to be discontinued if changes in hedge documentation are required solely by IBOR reform. Changes to the interest rate of the financial assets or liabilities that are required by IBOR reform may be accounted for by updating the effective interest rate prospectively, to reflect the change in the interest rate benchmark rather than being recognized as an immediate gain or loss. Any other additional changes to the basis for determining the contractual cash flow are determined in accordance with our existing accounting policies for loan modifications as described in Note 2.
74 | CWB Financial Group 2021 Annual Report
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