JPSCU AR 2018 finan web

NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st December 2018
(Expressed in Jamaican Dollars unless otherwise indicated)
3. Statement of Compliance, Basis of Preparation and Significant Accounting Policies:
(a) Statement of Compliance and Basis of Preparation -
The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS)
and their interpretations adopted by the International Accounting Standards Board (IASB), and comply with the
requirements of the Co-operative Societies Act. They have been prepared under the historical cost convention.
These financial statements are expressed in Jamaican Dollars which is the functional currency of the Credit Union.
(b) Use of Estimates and Judgements -
The preparation of financial statements in accordance with International Financial Reporting Standards (IFRS)
requires directors and management to make estimates and assumptions that affect the amounts reported in the
financial statements and accompanying notes. These estimates are based on historical experience and directors
and management's best knowledge of current events and actions and are reviewed on an ongoing basis. Actual
results could differ from those estimates.
Critical Accounting Esitmate and judgement applied
i) Classification of Financial Asset
The assessment of the business model within which the assets are held and assessment of whether the
contractuals terms of the financial assets are soley payments of principal and interest on the principal payment
amount outstanding requires management to make certain judgments on its business operations
ii) Impairment of Financial Assets
Establishing the criteria of determining whether credit risk of the financial assets has increase significantly since
initial recognition , determining the methodology for incorporating forward-looking information into the
measurement of expected credit losses (ECL) and selection and approval of models used to measure ECL
requires significant judgement.
Risk of Estimation uncertainty
i) Measurement of Expected Credit allowance/provision under IFRS 9
The measurement of expected credit allowance for financial assets measured at amortized cost and FVOCI is an
area that requires the use of complex models and significant assumptions about future economic conditions and
credit behaviour (e.g. That is the likelyhood of members defaulting and the resulting loss).
A number of significant judgements are also required in applying the accounting requirement for measuring
expected credit losses, as follow;
- Determining criteria for significant increase in credit risk;
- Selecting appropriate models and assumptions for the measurement of expected credit losses;
- Establishing of the number and re;ative weightings of forward-looking scenarios for each type pf product or
market and associated expected credit loss;
- Establishging groups of similar financial assets for the purpose of measuring expected credit losses.
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