Tier-3 scope
Most Chwezi SME clients hold only basic financial instruments: trade receivables, trade payables, bank balances, simple loans. For these, Section 11 (IFRS for SMEs) gives a complete model. Full IFRS 9 (classification by business model and SPPI test, ECL, hedge accounting) becomes load-bearing only for clients with material receivables, financing operations, or banking activity. Build Section 11 first; build full IFRS 9 when demanded.
Required first reads
doctrine/accounting-finance-doctrine.mddoctrine/references/ifrs-for-smes-default.md(Sections 11, 12)doctrine/references/full-ifrs-overlay.md(IFRS 9)doctrine/references/chart-of-accounts.md
Section 11 — basic financial instruments (IFRS for SMEs default)
Scope: cash, demand and fixed-term deposits, commercial paper, bonds, trade and other accounts receivable / payable, loans receivable and payable, commitments to receive a loan, and most basic investments in non-convertible preference shares and non-puttable ordinary shares.
- Initial measurement at transaction price (including transaction costs for those not at FVTPL); long-dated payment terms at PV.
- Subsequent at amortised cost using the effective-interest method.
- Impairment: assess at each reporting date; recognise impairment loss when objective evidence indicates an impairment event (incurred-loss-style for trade receivables).
- Derecognition on transfer of substantially all risks and rewards.
Section 12 — other financial-instrument issues (IFRS for SMEs)
For instruments outside Section 11 (e.g. options, forwards, complex hybrids). Most SME clients do not use 12.
IFRS 9 (full IFRS)
- Classification: business model + SPPI (solely payments of principal and interest). Buckets: amortised cost; FVOCI (debt); FVTPL; FVOCI (equity election).
- Measurement: amortised cost via effective interest, fair value otherwise.
- Impairment: Expected Credit Loss (ECL) model — 12-month ECL on Stage 1, lifetime ECL on Stage 2 and 3. Trade receivables use the simplified approach (lifetime ECL from initial recognition).
- Hedge accounting: optional; rules differ from IAS 39 (more principles-based).
Initial build (Tier-3 minimum)
- Trade receivables: track per customer, ageing buckets, allowance for doubtful debts:
- Section 11: incurred-loss assessment at each reporting date.
- IFRS 9: provision matrix by ageing bucket (loss-rate approach for simplified ECL on trade receivables).
- Trade payables: amortised cost (typically face value short-term).
- Bank balances: cash equivalents.
- Loans: amortised cost via effective interest; schedule generator.
- Equity instruments held: cost less impairment under Section 11 where fair value not reliably measurable; otherwise fair value.
- Derecognition rules: standard.
CoA implications
Section 11 / IFRS 9 simplified ECL on trade receivables:
| Code | Name |
|---|---|
| 1300 Trade Receivables Control | Asset. |
| 1310 Allowance for Doubtful Debts | Contra. |
| 6600 Bad Debts Expense | P&L. |
| 6610 Movement in Allowance for Doubtful Debts | P&L. |
Loans:
| Code | Name |
|---|---|
| 2600 Borrowings — Current Portion | |
| 2700 Borrowings — Non-current | |
| 8100 Interest Expense |
Forbidden patterns
- "Stage 2 / Stage 3" / ECL language used on an SME book without selecting full IFRS (blocker).
- Trade receivables held at face value with no allowance assessment (major).
- Hedge accounting applied without documentation (blocker under both standards).
- Equity instruments at FVTPL without explicit policy (where Section 11 cost model would otherwise apply).
Files
SKILL.md.references/section-11-impairment.md.references/ifrs-9-ecl-simplified-trade-receivables.md.references/effective-interest-schedule.md.
Last reviewed: 2026-05-12. Next review due: 2026-11-12.