In this article we share with you a example format for the Financial Instruments Note, based on the Financial Reporting Standard (NIF) C-2, which establishes the criteria for the recognition, valuation, presentation and disclosure of financial instruments.
This template includes comparative tables, prior-year data, and key sections on classification, valuation, risks, and guarantees, useful as a reference for companies that must comply with the requirements of the IFRS.
Introduction
NIF C-2 establishes the criteria for recognition, valuation, presentation and disclosure of financial instruments, distinguishing between assets, liabilities and capital.
1. Classification and valuation bases
Financial instruments are classified according to the Entity's business model and the characteristics of the contractual cash flows.
The measurement is carried out under one of the following criteria:
- Amortized cost
- Fair value through profit or loss
- Fair value through other comprehensive income
The choice of method depends on the nature of the instrument and the applicable business model.
2. Classes within investment categories
| Category | 2024 | 2023 | Detail |
|---|---|---|---|
| Negotiation | $XXX | $XXX | Mainly [bonds, stocks, etc.] |
| Available for sale / Held to maturity | $XXX | $XXX | [detail features] |
| Total | $XXX | $XXX |
3. Reclassifications
During the exercise [yes/no] reclassifications were made.
If yes:
| Concept | Detail |
|---|---|
| Reclassification date | [date] |
| Reason | [describe change in business model or strategy] |
| Reclassified amount 2024 | $XXX |
| Reclassified amount 2023 | $XXX |
4. Instruments granted as collateral
| Concept | 2024 | 2023 | Detail |
|---|---|---|---|
| Amount of instruments under guarantee | $XXX | $XXX | Linked to [detail: credits, contracts] |
5. Nature and extent of risks arising from financial instruments
a) Credit risk
| Concept | 2024 | 2023 |
|---|---|---|
| Maximum exposure | $XXX | $XXX |
| Mitigation | Guarantees, credit limits | Guarantees, credit limits |
b) Market risk
Includes:
- Exchange rate risk
- Interest rate risk
- Price risk
The entity carries out constant monitoring and uses selective coverage.
c) Concentration risk
| Type of concentration | 2024 | 2023 |
|---|---|---|
| By asset type | $XXX | $XXX |
| On the other hand | $XXX | $XXX |
| By sector/geography | $XXX | $XXX |
Additional revelations
- Qualitative: policies and procedures for risk management, measurement methodology, relevant changes in the period.
- Quantitative: sensitivity analysis, final exposure by risk type, concentration by sector/geography.
Conclusion
Clear and complete disclosure of financial instruments, such as that shown in this example, enables users of financial information to understand the entity's exposure to various risks and its management strategy.
NIF C-2 seeks to ensure that this information is transparent, comparable and relevant for decision-making.
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