In the context of Accounting Advisory Services, KPMG offers a comprehensive software solution for the calculation of Effective Interest Rate and Impairment according to the International Financial Reporting Standards.
The main features of the system are:
- Generation of cash flows of individual financial transactions to:
- Consider pre-payment risk
- Handle limitations of source systems
- Cash flows utilization for savings and/or investment products as the basis for deriving a constant yield (EIR) per financial transaction (loan account, deposit account, etc) for amortizing upfront fees and/or transaction costs
- Future cash flows discounting and provision calculation (impairment balance) on an individual or pool basis
- Unwinding of discount of impaired transactions expected cash flows and income realization
- Management of financial events affecting expected cash flows and actual recovery
- Generation of general ledger transactions/postings pertaining to the above and integration with accounting systems
The system supports full parameterization to meet local statutory requirements as well as the internal accounting and risk management processes of a financial institution or a group of financial institutions.