FRC Welcomes Report on Recommendations for IFRS 9 ECL Disclosures
The Financial Reporting Council (FRC) of the UK welcomed the report on recommendations for a comprehensive set of IFRS 9 expected credit loss (ECL) disclosures published by the Taskforce on Disclosures about Expected Credit Losses. The report presents the Taskforce's recommended disclosure requirements for ECL in a tabular format, along with the relevant IFRS disclosure requirements.
The report first sets out the disclosure principles used by the Taskforce in developing its recommendations as well as considerations applicable to all the recommended disclosures in respect of the scope, timing, frequency, location, and granularity. It then summarizes what the Taskforce views as the most important ECL considerations while explaining the related disclosures, why they matter to users, and where in the report the related recommendation can be found. As per the Taskforce, the most important considerations for ECL relate to policies and methodologies; alignment between accounting for credit losses and credit risk management activities; forward-looking information; movement and coverage across stages; changes in the balance sheet ECL estimate; credit risk profile; regulatory capital; governance and oversight; and measurement uncertainty, future economic conditions, and critical judgments and estimates. Finally, the report sets out the disclosure recommendations of the Taskforce in tabular format, along with the relevant IFRS disclosure requirements.
The ECL impairment model introduced by IFRS 9 will have a significant effect on how banks calculate loan-loss provisions. Given the complexity of these models and the high degree of management judgment involved in these calculations, high-quality disclosures are an essential element of successfully implementing this new requirement. These disclosures should, among other things, clearly set out the accounting judgments exercised by management and provide information about the estimation uncertainty inherent in the calculations. To facilitate the provision of high-quality disclosures, FRC, along with PRA and FCA, sponsored the Taskforce, which comprises preparers and users, to build on the existing disclosures in IFRS 7 and develop further guidance on high-quality disclosures about ECL. The report acknowledges that some of the recommendations are stretching and may require a number of years to be implemented.
Related Links
Keywords: Europe, UK, Banking, Accounting, IFRS 9, ECL, Disclosures, Task Force, PRA, FCA, FRC
Related Articles
|
News
APRA Releases Minor Changes to Reporting Standards on SA-CCR for BanksAPRA released minor changes to the three reporting standards for the standardized approach for measuring counterparty credit risk exposures (SA-CCR).
May 22, 2019
WebPage
Regulatory News
|
|
News
APRA on Industry Self-Assessments into Governance and AccountabilityAPRA released an information paper analyzing the self-assessments performed by 36 of the country’s largest banks, insurers, and superannuation licensees in response to the final report on the Prudential Inquiry into the Commonwealth Bank of Australia (CBA).
May 22, 2019
WebPage
Regulatory News
|
|
News
APRA Proposes to Amend Guidance on Residential Mortgage LendingAPRA is consulting on revisions to the prudential practice guide APG 223 on residential mortgage lending in Australia.
May 21, 2019
WebPage
Regulatory News
|
|
News
IASB Proposes Improvements to IFRS 9 and IFRS 16IASB published the exposure draft ED 2019/2 that proposes amendments to four IFRS standards, including IFRS 9 on Financial Instruments and IFRS 16 on Leases.
May 21, 2019
WebPage
Regulatory News
|
|
News
ESAs Amend Technical Standards on Mapping of ECAIs Under CRRESAs published a second amendment to the implementing technical standards on the mapping of credit assessments of External Credit Assessment Institutions (ECAIs) for credit risk under the Capital Requirements Regulation (CRR).
May 20, 2019
WebPage
Regulatory News
|
|
News
OCC Consults on Information Collection for Home Mortgage DisclosuresOCC is soliciting comment on the revision of the information collection titled “Regulation C—Home Mortgage Disclosure.” OCC also notes that it has sent the collection to OMB for review.
May 20, 2019
WebPage
Regulatory News
|
|
News
OCC Report Examines Key Risks for Federal Banking SystemOCC published the Seminannual Risk Perspective for Spring 2019.
May 20, 2019
WebPage
Regulatory News
|
|
News
ESMA Updates the List of Guidelines Under Its Mandate in May 2019ESMA updated the overview of guidelines published under its mandate, with information and links to the related documents.
May 20, 2019
WebPage
Regulatory News
|
|
News
EIOPA Updates Q&A on Regulations in May 2019EIOPA published additional questions and answers (Q&A) on guidelines, directives, and regulations applicable to insurers in Europe.
May 17, 2019
WebPage
Regulatory News
|
|
News
FSB Publishes Update on Meeting of RCG for AmericasFSB published a summary of the meeting of its Regional Consultative Group (RCG) in Americas.
May 17, 2019
WebPage
Regulatory News
|
