Dynamics 365 One Version – April 2019 is fast approaching

December 16th, 2018 by Stephen Jones No comments »

If you are running Microsoft Dynamics 365 for Finance and Operations and you are on version 7.3 or below, then be aware that the product will be considered as end of service after March 31, 2019. Note however that other Dynamics 365 Apps are also impacted e.g. Customer Engagement and Field Service.

https://docs.microsoft.com/en-us/dynamics365/get-started/faq-update-policy

From April 2019, all Microsoft Dynamics 365 customers for all Dynamics solutions, will run on the same version and code base. This means from Microsoft point of view that it is still possible to have own customizations and ISV solutions in your own environment. The standard application will be the same for all customers.

As of April 2019, the product version number will be 10.0. From then expect major releases every April and October.
In between there will be continuous updates for platform, application and financial reporting fixes as well as smaller functional features and regulatory requirements. Version number ‘9’ will be skipped for Finance and Operations. Customer engagement is on version 9 so to have a single product range on the same vision, Microsoft has to align the version numbering to be the same across all of the Dynamics apps.

The service will also end for version 8.0. We advise to move to version 8.1 as soon as possible. If you are already on version 8.1, then you are already enrolled in the continuous update plan. The 10.0 version will then be an update when coming from this latest version; not an upgrade.

If you are running on version 7.3, then in general you also have to be on version 10.0 starting April 2019. If you have submitted extension requests, then you are expected to have no issues for upgrading and your 7.3 environment will be considered as end of service starting April 2019. That also means you need to move all over-layered coding into extensions. If you use an ISV module then check with the ISV vendor whether is ahs issues with over-layered code to resolve.

There is limited time to prepare and test, (and limited D365 technical skills, in the market to move all customers at the last minute, and it does not happen in a day.) Starting with the April 2019 update, you can validate major updates in a sandbox environment in advance of the update release. This will help you assess productivity and efficiency gains of the new capabilities, as well as train your end users about new capabilities

It’s important to do this sooner than later. The move from 7.3 is a significant exercise i.e. it’s an upgrade. Thereafter the advantage of the new platform is that in future it will be updates. The ongoing April and October updates will be backward compatible.

There are many enhancements both technical, and functional in 8.0/B.1. So plan time for some additional end user training and testing days.

Sql 2014 Sp2 Update 15

December 15th, 2018 by Stephen Jones No comments »

The 15th cumulative update release for SQL Server 2014 SP2 is available for download at the Microsoft Downloads site.
Registration is no longer required to download Cumulative updates.

CU15 KB Article: https://support.microsoft.com/en-us/help/4469137

Microsoft® SQL Server® 2014 SP2 Latest Cumulative Update: https://www.microsoft.com/download/details.aspx?id=53592

Update Center for Microsoft SQL Server: http://technet.microsoft.com/en-US/sqlserver/ff803383.aspx

Micorsft is to discontinue its Azure Container Service in Jan 2020

December 15th, 2018 by Stephen Jones No comments »

On December 5, Microsoft officials said in a blog post that ACS will no longer be supported as of January 31, 2020. Beginning on that date, all ACS application programming interfaces (APIs) will be blocked. Users will no longer be able to create new clusters, or update or scale existing clusters. They will be able to list and delete existing clusters.

Microsoft’s recommendations for existing ACS users are to migrate to AKS or the ask-engine open-source project if they use Kubernetes.

If they use ACS with Docker, then Microsoft suggests moving to the Basic or Standard/Advanced Docker Enterprise Edition for Azure solution template.

If they use ACS with DC/OS, then they advocate that users move to the Mesosphere DC/OS Enterprise or Mesosphere DC/OS Open Source solution template

Hitec Dubai 2018- Synergy Software Systems, Deyafa Systems showcase ‘Inigma’.

December 6th, 2018 by Stephen Jones No comments »

Dubai Corporation for Tourism and Commerce Marketing (DCTCM) CEO Issam Kazim officially inaugurated the second HITEC 2018 Dubai, the Middle East’s largest, hospitality technology, exhibition and conference.

This year’s event took place yesterday and today at the Madinat Jumeirah Dubai ( December 5- 6) and showcased a wide range of innovative solutions from the world’s leading hospitality technology providers. Synergy Software Systems together with Deyafa Systems presented the Inigma software solution.

Inigma task management system and collaboration platform offers a smoother and more efficient way to run operations for any hotel.

https://www.youtube.com/watch?v=r8ZiVzKQ5G4

Synergy and Inigma stand with John M. Clark Vice President – SynergyMMS Division. Systems Associates

Dynamics 365 Finance and Operations on-premise v 8.1 – ask Synergy Software Systems

December 3rd, 2018 by Stephen Jones No comments »

Microsoft published last month that version 8.1 was released for on-premise version of D365FO.

https://docs.microsoft.com/en-us/dynamics365/unified-operations/dev-itpro/migration-upgrade/on-prem-version-update-policy?toc=/fin-and-ops/toc.json#dynamics-365-for-finance-and-operations-on-premises-release-dates.

Synergy has completed the upgrade, and also upgraded its D365 Payroll and HR admin modules for this new release and for the latest kernel..

Note: All customers must be on the latest version of Finance and Operations by April 30, 2019. However, Microsoft will make an exception for customers who have unfulfilled extension requests that have been submitted to Microsoft. Those customers can be on version 7.3 until April 2020.

Layered code is not supported after version 7.3

See:
docs.microsoft.com/…/apply-updates-on-premises
docs.microsoft.com/…/redeploy-on-prem

https://docs.microsoft.com/en-us/dynamics365/unified-operations/dev-itpro/migration-upgrade/upgrade-latest-update

If you need proven expertise toupdate your D365 from v 7 then contact U.A.E. Dynamics partner Synergy Software Systems 0097143365589.

Shared Access Signature (SAS) token authorization model and Dynamics 365 systems

November 29th, 2018 by Stephen Jones No comments »

In November 2018, all ACS components were permanently shut down. This affects all requests to the service i.e. those fail. This includes the Access Control management portal, the management service, secure token service, and token transformation engine rule. Microsoft made changes to Azure Service Bus that affect Microsoft Dynamics AX 2012 Azure connector, and impact email workflow approvals, companion/mobile applications, and vendor portals. It also affects any other application or service that uses Access Control Service (ACS).

If for example you use Dynamics AX 2012 mobile or tablet applications for time and expense management, and/or approve workflows via email, then be aware of the changes to Azure Service Bus. The Microsoft Dynamics AX 2012 Azure connector uses the Access Control Service (ACS) for user authentication. The management of authorization rules is managed inside by the Azure Active Directory Access Control Service (ACS), and the tokens obtained from ACS are then passed to Service Bus to authorize access to functionality in AX.

ACS is now replaced by Shared Access Signature (SAS) token authorization model. A shared access signature (SAS) provides you with a way to grant limited access to objects in your storage account to other clients, without exposing your account key. A shared access signature provides delegated access to resources in your storage account. With a SAS, you can grant clients access to resources in your storage account, without sharing your account keys. This is the key point of using shared access signatures in your applications–a SAS is a secure way to share your storage resources without compromising your account keys.

To continue using email workflow approvals, mobile applications, and other Dynamics AX features, if you have nit already done so then you will need to migrate your components previously using Access Control Service (ACS) to Shared Access Signatures (SAS). This token model is provided directly by Service Bus and can be used without any intermediaries through access to the SAS rule name and rule key.

https://docs.microsoft.com/en-us/azure/active-directory/develop/active-directory-acs-migration

https://docs.microsoft.com/en-us/dynamics365/customer-engagement/developer/walkthrough-update-service-endpoint-acs-sas-authorization

Retail Cloud Scale unit – Dynamics 365 Finance and Operations – October 18 release.

November 27th, 2018 by Stephen Jones No comments »

In the October 2018 release, Microsoft launched the concept of Retail Cloud Scale Unit (RCSU) to increase cloud scalability for customers consuming retail work-loads on the D365 platform.
The Retail Store Scale Unit (RSSU) which was already available in D365 Retail is different from the newly released RCSU functionality. It is “on-premises” box physically located within the store which allows retailers with intermittent internet (and hence cloud) connectivity issues to still execute cross terminal transactions and shift operations when they lose connectivity to the back office. It contains a retail server, a channel database, CDX Asynch client and the IIS website to enable cloud POS features.

(Even though the RSSU hardware is running on “on-premises” hardware, this concept is not to be confused with the Microsoft Dynamics 365 for Retail “on-premises” deployment option which is also another recent release from Microsoft for those who want to run their entire D365 operation on -premise)
For a D365 Cloud deployments with RSSU, the D365-Finance and Operations Enterprise Modules (including your Retail HQ) still run in the cloud. When you have connectivity in your store both mPOS and cPOS are connected to your cloud-hosted deployment..
When offline with RSSU, please note “In Store Scale Unit, users cannot perform any real time operations such as issuing gift cards, looking up products, or performing credit card transactions, unless there is Internet connectivity to HQ or a payment provider. If the majority of your transactions involve real time transactions, then your Store Scale Unit will always need Internet connectivity to enable the connection to HQ or payment provider.”
Also note that mPOS stations also have the ability to be configured to go offline individually and to each use its own local SQL Express database on the POS device itself. That does however mean more data synchronsiation and the relevant extra batch tasks have to then run per POS rather than per store..
So where does the RCSU functionality in the October 2018 release fit in the architecture?.
See https://docs.microsoft.com/en-us/business-applications-release-notes/october18/dynamics365-retail/retail-cloud-scale-unit
A key feature is that it separates the front-office and back-office work-loads into separate infrastructure to improve performance due to: better resource governance and load isolation, segregation of work-loads and scalability. When applying an update, patch or extension the l down-should be significantly reduced because the whole environment does not go down, only a specific work-load. The back-office does not need to go down when the front-office retail work-loads are upgraded and the retail operations can continue when they have RSSU and/or offline functionalities deployed locally in the store.
Caveats:
This functionality is only available on Production and SAT environments. It is not supported for Tier-1 environments, (sandboxes for dev). In the current RCSU you cannot deploy a separate retail scale unit per region.

Dynamics 365 Finance and Operations is to add EAM next year- ask Synergy Software Systems

November 27th, 2018 by Stephen Jones No comments »

Microsoft is targeting the October 2019 release i.e, a year away,to offer enterprise asset management (EAM) natively to Dynamics 365 for Finance and Operations (D365FO) using the solution from ISV partner Dynaway The company “will be making it available natively” in D365FO, writes GM Muhammad Alam. Microsoft acquired the rights to the solution rather than purchasing the company or the IP. The EAM solution, includes asset tracking, preventive and predictive maintenance, spare parts tracking, and analytics..

This move provides a springboard for further AI-focused updates in the EAM space to bring together Dynamics 365, Power Apps, Power BI, IoT, MR applications, and Machine Learning. An EAM solution also complements the Dynamics 365 for Field Service application –so I expect the same integration there that they are planning for integrating CRM PSA and Dynamics 365 Finance and operations Project Accounting.

Other recent acquisitions include enterprise credit management and catch weight.
Synergy Software Systems has implanted and supported EAM and asset tracking solutions in the region for over 20 years.

For more information on dynamics 365 for Finance and Operations contact Synergy Software Systems, Dubai your U.A.E. Dynamics partner since 2003.
call: 0097143365589

RPA certifications for Synergy Software Systems, Dubai

November 25th, 2018 by Stephen Jones No comments »

I am pleased to announce that following extensive training over recent weeks two of our consultants have already achieved certifications.

If you have an ROA project in mind and need support for your project from a proven, local. UAE partner then please call Synergy Software Systems on 0097143365589

Microsoft to open two Data centres in S Africa at the end of 2018

November 25th, 2018 by Stephen Jones No comments »

18 months ago Microsoft said it would deliver two new data centres one based in South Africa North in Johannesburg and South Africa West in Cape Town.
Microsoft South Africa’s Director of Commercial Partners, Lionel Moyal, recently announced, while speaking to entrepreneurs and startups at the Global Entrepreneurship Week 2018 in South Africa. that the two Azure datacenter regions are due to go live “within weeks” at the end of 2018. Calling the centres “a cloud for Africa”, he noted that “latency will not be an issue any more.” Lionel encouraged workers to skill up in cloud technologies, machine learning, AI, mobile technologies, development tools, noting that he expected South Africa to add 112,000 IT specific jobs by 2022.

The announcement follows Amazon saying in October 2018 that AWS was to open Data Centers in South Africa by 2020.

Microsoft Kaizala – secure mobile chat app for the U.A.E. mobile enterprise -ask Synergy Software Systems

November 21st, 2018 by Stephen Jones No comments »

What is Microsoft Kaizala?
A disconnected value chain hinders productivity, slows down decision making, prevents the ability for insights to surface from the field, and creates potential for customer dissatisfaction. Today’s workplace extends well beyond organizational boundaries, and there is an increasing need to connect your entire business value chain, including your Firstline workers, vendors, partners, suppliers, and customers..

Today, consumer messaging apps are often used between people across the value chain, but this poses security, privacy and compliance risks to company data. Microsoft Kaizala aims to solve a lot of these challenges, especially in mobile-first, developing markets.

Microsoft Kaizala is a simple and secure mobile chat app for work, with easy sign-up using just a phone number.
It enables networks of people to connect and coordinate work across their roles, spanning Firstline workers, vendors, partners, suppliers, customers, and citizens. Many organizations are already doing amazing things with Kaizala.

Communicate across dynamic networks: Kaizala supports diverse group types such as: hub and spoke, hierarchies, and public groups – which model the
communication needs of your organization. Use it to connect with your customers and partners or your Firstline workers. Temporal and geo-fenced groups make the set-up and discovery of groups easy, and large group size of up to 1 million users enables scenarios such as government-to-citizen communication.

Digitize business processes to coordinate work and gather field insights: Across every business, there is valuable data that originates at the front lines and out in the field, from sales metrics, to customer experience and operational insights. The problem is that much of it is either still paper-based or not getting recorded at all. Kaizala makes it. Gather field insights in mobile-first, dynamic environments with built-in actions such as surveys, polls, jobs and more.

Integrations with Office 365 services such as Power BI and Microsoft Flow allow you to quickly build customizable business workflows that use Kaizala’s chat interface. Kaizala allows you to integrate with existing applications and systems so you can connect your business end-to-end and digitize manual, paper-based procedures.

The built-in reports on the management portal let you visualize and analyse the data – giving you real-time insights into your business and helping drive day to day efficiencies. You can also build custom cards to support your line of business tasks using Kaizala aggregation service.

Manage and secure your data: Kaizala is served from the hyperscale global network of Azure datacentres and data is encrypted at rest and in-transit. Advanced IT administration capabilities with the Kaizala management portal allow business owners to view reports, create and manage groups, define group policies etc. Kaizala supports key compliance standards such as ISO 27001, SOC2, HIPAA, GDPR and more.

How do I get access to Kaizala?
Customers that are currently licenses on Office 365 and Microsoft 365 Business products (Office 365 Business Essentials, Office 365 Business, Office 365 Business Premium and Microsoft 365 Business) in eligible 28 markets* will be able to utilize Microsoft Kaizala starting mid-November.

Kaizala is now turned on by default in these products, with the ability for tenant administrators to opt out. A more detailed on the communications timeline is found below:
• Communications sent to tenant administrators letting them know about the Kaizala backfill (end October)
• Message Center Admin comms (11/5)
• Blog post on the Kaizala Microsoft Tech Community, outlining the product value prop, availability with Office 365 and how to access the product
• Kaizala backfilled in SMB tenants (Mid-November)

What next?
Contact your UAE Microsoft 365 partner Synergy Software Systems 0097143365589
Download the Kaizala mobile app for free from Google Play Store or App Store

Making Tax Digital (MTD)

November 19th, 2018 by Stephen Jones No comments »

If you have U.K operations then be aware of Making Tax Digital (MTD), a transformational approach to taxation in the UK from HMRC. The first change is coming in 2019 and will affect every organisation from processes to how systems are set up to record and report tax.

This will affect all companies with U.K, financial operations and all financial software. From April 2019, businesses that are registered for VAT and have turnover above the VAT registration threshold of £85,000 will be required to keep digital records for VAT purposes and submit their quarterly VAT return updates to HMRC through functional compatible software

The new VAT record keeping rules requires that all applicable VAT return data is digitally linked so that transactions can be traced from source data (i.e. purchase/sales ledger) to VAT return completion and upload.

Key benefits for businesses include improved visibility over their tax situation and easier access to tax information online; enabling businesses to plan and budget more effectively, driving performance and growth

With Making Tax Digital, the new regulation from HMRC going live from 1 April 2019, it’s time to start preparing. This is similar to the legislation already implemented in the U.A.E. which we have done for both infor SunSystems, and Dynamics 365/Dynamics Ax.

Which versions of Dynamics AX will Microsoft be ‘Making Tax Digital’ compliant?

Any Dynamics product that is still under mainstream support will get an update from Microsoft to ensure full compliance. This means for Dynamics AX only Dynamics AX 2012 R3 will be automatically updated. Microsoft have not confirmed when this update will take place – there are still some further details to come from HMRC.

Receiving the Microsoft update may not be enough to guarantee full compliance – there will likely need to be a number of small updates such as capturing the right fields and updating commercial forms, and reporting format that will need to be confirmed.

In addition, by April 2020 you will need to ensure all of your processes are fully digital.

Windows 10 October 2018 Update (Redstone 5) now Available

November 18th, 2018 by Stephen Jones No comments »

After its initial release on October 2nd and then its withdrawal from public availability due to data loss bugs, the Windows 10 October 2018 Update was re-released last week.

The last two feature updates have not gone smoothly for Microsoft. Both the April 2018 Update and the October 2018 Update have shaken the confidence of Windows users across the globe. The latter release was pulled from its release status for nearly six weeks due to serious data loss bugs,

Some initial reports indicate thatmapped drives to Windows Server 2019 and Windows Server Version 1809 are not working with Windows 10 Version 1809. There are also acknowledged issues relating to Trend Micro software and AMD Radeon HD 2000/4000 video cards. So the widespread perception of on a flawed development and testing process seems to be justified. Microsoft laid off a load of tester in 2014. As part of the general move to Devops and early user feedback in the pursuit of agility and amore frequent code release cadence. However such early adopter/crowd testing/early adopter approaches while useful for improving user interaction and functionality is not a substitute for formal testing.

Many worry about the same approach to Dynamics. The roles of telemetry and automated, self elarning test tools should not be underestimated. new leadership of the Windows team is committing to better quality moving forward. Michael Fortin, the new Corporate Vice President for Windows after the departure of Terry Myerson, wrote more than 2,000 words on the official Windows Blog to discuss quality for Windows 10.
He refers to a key metric that tells Microsoft quality is improving over the lifetime of Windows 10. The Customer Incident Rate (CIR) is measured in hundreds per million devices and spiked at its highest level under Windows 10 in August 2015 at around 1500 CIR’s. Since then it has steadily declined over the last three years with the April 2018 Update seeing a CIR of approximately 500.

No doubt that reduced need for technical support via customer service calls or chat is a solid indicator. Whether individual users are not experiencing severe enough issues to trigger support options or whether they are just living with the problems, or resolving them by searching for an answer on the Internet is unknown.

Aother stat, Net Promoter Scores (NPS), are derived by asking users to rate their experience with Windows 10. Promoters and detractors are then documented and a ratio is created to show the positive or negative trends. According to Fortin, the Windows 10 April 2018 Update currently has the highest MPS of any version of Windows 10. So it’s not all bad and maybe Microsoft does listen.

Transparent communication with customers is an essential step to win back confidence. A successful Windows 10 19H1 release is going to be the next crucial step.

ROI On Microsoft Dynamics

November 14th, 2018 by Stephen Jones No comments »

what’s the true return on investment (ROI) for an average Dynamics 365 deployment?”

Thanks to a newly released independent analysis from Nucleus Research, we can reveal the answer:

For every dollar spent, companies realize an average of $16.97 in returns.

According to the report summary, “this is significantly higher than the average for both enterprise resource planning (ERP) and customer relationship management (CRM), which deliver, on average, $7.23 and $8.71 respectively. Nucleus found that companies taking advantage of Microsoft’s investments in cloud and usability, as well as integration and analytics, were able to achieve significant returns by increasing productivity and revenues and reducing costs.”

The report dives in the value drivers for the cases, and revels that the common elements to the financial success of deployments include:

• The ability to integrate Microsoft solutions with existing applications and data sources
• The enablement of new lines of business, such as cross-selling and up-selling with field service
• A focus on a standardized, easy-to-use user interfaces—the familiar Microsoft look and feel that can help speed up onboarding and user adoption
• Cost savings and greater innovation realized by deploying cloud-based Microsoft business applications
• The focus on improving user productivity by automating, or standardizing, repeatable manual processes

The report is a fascinating read that we invite you to explore on your own. If you are interested in investing in the modern Dynamics enterprise system system then contact Synergy Software Systems and we will send you a copy.

0097143365589

IFRS 9

November 7th, 2018 by Stephen Jones No comments »

The Standard includes requirements for recognition and measurement, impairment, de-recognition and general hedge accounting. This standard has replaced IAS 39 and responds to the criticisms that IAS 39 was too complex,
inconsistent with the way entities manage their businesses and risks, and defer the recognition of credit losses on loans and receivables until too late in the credit cycle.

The new standard is based on the concept that financial assets should
be classified and measured at fair value, with changes in fair value recognized
in profit and loss as they arise (“FVPL”). That is unless restrictive criteria are met for classifying and measuring the asset at either Amortized Cost or Fair Value Through Other Comprehensive Income (“FVOCI”) subject to a special
FVOCI designation option for investments in equity instruments, only
loans, receivables, investments in debt instruments and other similar
assets ( “loans and receivables”), can qualify for measurement at Amortized Cost or FVOCI. The key questions are whether:
• The objective of the entity’s business model is to hold assets only to collect
cash flows, or to collect cash flows and to sell (“the Business Model test”),
and
• The contractual cash flows of an asset give rise to payments on specified
dates that are solely payments of principal and interest (“SPPI”) on the
principal amount outstanding (“the SPPI test”).

Both of these tests determine whether to account for an instrument at
Amortized Cost or FVOCI

IFRS 9 specifies how an entity should classify and measure financial assets, financial liabilities, and some contracts to buy or sell non-financial items. IFRS 9 , deals separately with the classification and measurement of financial assets, impairment and hedging.

IFRS 9 requires an entity to recognise a financial asset or a financial liability in its statement of financial position when it becomes party to the contractual provisions of the instrument. At initial recognition, an entity measures a financial asset or a financial liability at its fair value plus or minus, in the case of a financial asset or a financial liability not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial asset or the financial liability.

So why does it matter if you are not in the Financial services sector?
Any entity with long-term loans, equity investments, or any non-standard financial assets, or only holding short-term receivables may find that it requires
significant changes to its financial reporting as the result of this standard.

Possible consequences of IFRS 9:
Income statement volatility. More assets will
have to be measured at fair value with changes in fair value recognized in
profit and loss as they arise.

Earlier recognition of impairment losses on receivables and loans,e.g. trade receivables. Entities will have to provide for possible
future credit losses in the first reporting period that a loan goes on the books
– even when it is highly likely that the asset will be fully collectible.

New disclosure requirements—the more significantly impacted may even need new systems and processes to collect the necessary data.

IFRS 9 is an opportunity for balance sheet optimization, enhanced efficiency of
the reporting process and cost savings.

Before your year end audit consider the possible impact on financial statements, systems, processes, controls.

Financial assets

When an entity first recognises a financial asset, it classifies it based on the entity’s business model for managing the asset and the asset’s contractual cash flow characteristics, as follows:

Amortised cost—a financial asset is measured at amortised cost when both of the following conditions are met:
◦ the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows; and
◦ the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Fair value through other comprehensive income—financial assets are classified and measured at fair value through other comprehensive income when these are held in a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets.

Fair value through profit or loss—any financial assets that are not held in one of the two business models mentioned are measured at fair value through profit or loss.

When, and only when, an entity changes its business model for managing financial assets it must reclassify all affected financial assets.
Financial liabilities

All financial liabilities are measured at amortised cost, except for financial liabilities at fair value through profit or loss. Such liabilities include derivatives (other than derivatives that are financial guarantee contracts or are designated and effective hedging instruments), other liabilities held for trading, and liabilities that an entity designates to be measured at fair value through profit or loss (see ‘fair value option’ below).

After initial recognition, an entity cannot reclassify any financial liability.

Fair value option

An entity may, at initial recognition, irrevocably designate a financial asset or liability that would otherwise have to be measured at amortised cost or fair value through other comprehensive income to be measured at fair value through profit or loss when doing so will either eliminate, or significantly reduce a measurement or recognition inconsistency (sometimes referred to as an ‘accounting mismatch’) or will otherwise result in more relevant information.

Impairment

Impairment of financial assets is recognised in stages:

Stage 1—as soon as a financial instrument is originated or purchased, 12-month expected credit losses are recognised in profit or loss and a loss allowance is established. This serves as a proxy for the initial expectations of credit losses. For financial assets, interest revenue is calculated on the gross carrying amount (ie without deduction for expected credit losses).

Stage 2—when the credit risk increases significantly and is not considered low, full lifetime expected credit losses are recognised in profit or loss. The calculation of interest revenue is the same as for Stage 1.

Stage 3—when the credit risk of a financial asset increases to the point that it is considered credit-impaired, interest revenue is calculated based on the amortised cost (ie the gross carrying amount less the loss allowance). Financial assets in this stage will generally be assessed individually. Lifetime expected credit losses are recognised on these financial assets.

Hedge accounting

The objective of hedge accounting is to represent, in the financial statements, the effect of an entity’s risk management activities that use financial instruments to manage exposures arising from particular risks that could affect profit or loss or other comprehensive income.

Hedge accounting is optional. An entity applying hedge accounting designates a hedging relationship between a hedging instrument and a hedged item. For hedging relationships that meet the qualifying criteria in IFRS 9, an entity accounts for the gain or loss on the hedging instrument and the hedged item in accordance with the special hedge accounting provisions of IFRS 9.

IFRS 9 identifies three types of hedging relationships and prescribes special accounting provisions for each:

fair value hedge: a hedge of the exposure to changes in fair value of a recognised asset or liability or an unrecognised firm commitment, or a component of any such item, that is attributable to a particular risk and could affect profit or loss.

cash flow hedge: a hedge of the exposure to variability in cash flows that is attributable to a particular risk associated with all, or a component of, a recognised asset or liability (such as all or some future interest payments on variable-rate debt) or a highly probable forecast transaction, and could affect profit or loss.

hedge of a net investment in a foreign operation as defined in IAS 21.

When an entity first applies IFRS 9, it may choose to continue to apply the hedge accounting requirements of IAS 39, instead of the requirements in IFRS 9, to all of its hedging relationships.

IFRS 9 is effective for annual periods beginning on or after 1 January 2018.