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) 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
Share-based payments
Cash resources
Contingent liabilities and commitments
Securities
Other income and other expenses
Securities sold under repurchase agreements and purchased under resale agreements Loans, impaired loans and allowance for credit losses Financial assets transferred but not derecognized
Income taxes Earnings per common share Related party transactions
Interest rate sensitivity
Property and equipment
Interest income
Goodwill and intangible assets Derivative financial instruments
Fair value of financial instruments Financial instruments - offsetting
10 11 12 13 14 15
Other assets
Risk management
Deposits
Capital management
Other liabilities
Subsidiaries
Debt
Comparative figures
Capital stock
J) CHANGES IN ACCOUNTING POLICIES IAS 12 Income Taxes
In May 2021, the IASB issued Deferred Tax related to Assets and Liabilities arising from a Single Transaction ( Amendments to IAS 12 Income Taxes). The amendments narrow the scope of the initial recognition exemption so that it does not apply to transactions that give rise to equal and offsetting temporary differences. As a result, there is recognition of a deferred tax asset and a deferred tax liability for temporary differences arising on initial recognition of a lease and a decommissioning provision. CWB adopted the amendments effective for our fiscal year beginning November 1, 2022 and there was no significant impact upon adoption.
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.
IFRS 17 Insurance Contracts In May 2017, the IASB issued IFRS 17 Insurance Contracts which will replace IFRS 4 Insurance Contracts. In June 2020, the IASB issued amendments to IFRS 17 aimed at helping companies implement the Standard and to defer the effective date. In December 2021, the IASB issued a narrow-scope amendment to the transition requirements in IFRS 17, providing insurers with an option aimed at improving the usefulness of information to investors on initial application of IFRS 17 by presenting comparative information about financial assets, using a classification overlay approach on a basis that is more consistent with how IFRS 9 will be applied in future reporting periods. This Standard introduces consistent accounting for all insurance contracts. The Standard requires a company to measure insurance contracts using updated estimates and assumptions that reflect the timing of cash flows and any uncertainty relating to insurance contracts. Additionally, IFRS 17 requires an entity to recognize profits as it delivers insurance services, rather than when it receives premiums.
CWB will adopt the new Standard and its amendments for our fiscal year beginning November 1, 2023. We have assessed the Standard and amendments and determined there will be no significant impact upon adoption.
2. FINANCIAL INSTRUMENTS
Financial assets include cash resources, securities, securities purchased under resale agreements, loans, derivatives and certain other assets. Financial liabilities include deposits, cheques and other items in transit, securities sold under repurchase agreements, derivatives, debt and certain other liabilities.
The use of financial instruments exposes CWB to credit, liquidity and market risk. A discussion of how these are managed can be found in the Risk Management section of the MD&A.
CLASSIFICATION AND MEASURMENT OF FINANCIAL ASSETS Initial Recognition and Measurement Financial assets consist of both debt and equity instruments. Financial assets are initially recognized at fair value and subsequently measured at fair value through profit or loss (FVTPL), fair value through other comprehensive income (FVOCI) or amortized cost.
70 | CWB Financial Group 2023 Annual Report
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