IFRS 9 ‘Financial instruments’: Anticipated effects of the standard change at Kesko Group

IFRS 9 Financial instruments presents the classification and measurement, the impairment and the hedge accounting requirements for accounting of financial instruments. The standard was set by the International Accounting Standards Board to replace IAS 39 Financial instruments: Recognition and Measurement on 1 January 2018. Hence, the long-criticized and complexly experienced requirements for accounting of financial instruments will undergo the most significant reform. This thesis addresses anticipated effects of IFRS 9, focusing on the challenges the new classification and measurement requirements bring forth in the case organization Kesko. This thesis was conducted as an action research, in which, a case study method was applied. The thesis was conducted with a twofold manner, which involved general analysis of IFRS 9 and further covered distinct ambitions related to the case organization. For the general part, empirical data was gathered by interviewing two IFRS experts from KPMG and PwC, while the interviews within the case organization constituted for the case study. Further, the literature on the IFRS 9 was such scant that the theoretical examination was merged with the IFRS experts’ quotations that also strived to contribute to the overall objective of reinforcing the body of research related to the subject. This thesis indicates that IFRS 9 will most fundamentally reform the impairment and the hedge accounting requirements of financial instruments. Regard to impairment, the changes are anticipated to increase the amount of loan-loss provisions, whereas the relaxed hedge accounting requirements are expected to encourage more companies to commence the application of hedge accounting. The thesis provides empirical support on that the term business model for managing financial assets, introduced in IFRS 9, is ably hard to comprehend and remains ambiguous. It goes on to argue that the most prominent issue in defining the business model for managing financial assets is the limits set in IFRS 9 for selling financial assets. In consideration of Kesko, this thesis finds that the key effects of IFRS 9 are anticipated to be the reshaping of the organization’s treasury policy and further examination of the possibility to apply hedge accounting for foreign exchange derivatives. What is more, the thesis presumes that complying the requirements of IFRS 9 Kesko will apply the hold to collect and sell model for managing financial assets in future.

Generation of a business plan for a logistics service provider

The purpose of this Master’s Thesis was to study the suitability of transportation of liquid wastes to the portfolio of the case company. After the preliminary study the waste types were narrowed down to waste oil and oily waste from ports. The thesis was executed by generating a business plan. The qualitative research of this Master’s Thesis was executed as a case study by collecting information from multiple sources. The business plan was carried out by first familiarizing oneself with literature related to business planning which was then used as a base for the interview of the customer and interviews of the personnel of the case company. Additionally, internet sources and informal conversational interviews with the personnel of the case company were used and these interviews took place during the preliminary study and this thesis. The results of this thesis describe the requirements for the case company that must be met to be able to start operations. Import of waste oil fits perfectly to the portfolio of the case company and it doesn’t require any big investments. Success of the import of waste oil is affected by price of crude oil, exchange rate of ruble and legislation among others. Transportation of oily waste from ports, in turn, is not a core competence of the case company so more actions are required to start operating such as subcontracting with a waste management company.