Large UK banks work with users to enhance sense-making of IFRS 9
Izette Kluever, Technical Specialist in Accounting at the Bank of England, reflects on a recent addition to the IFRS 9 Expected Credit Loss (‘ECL’) disclosure landscape – a report by the Taskforce on Disclosure about ECL (‘DECL’).
We all know jokes starting with: “How many accountants does it take to …” In the case of compiling “Recommendations on a comprehensive set of IFRS 9 Expected Credit Loss (‘ECL’) disclosures” it took nine accountants of the largest UK banks and buildings societies and fourteen users. The aim was not to change a light bulb, but the effect definitely shines more light on ECL. As a user member puts it: “The Taskforce on Disclosure about ECL (‘DECL’) has been a useful forum for users to present their needs and for preparers to explain what is feasible.”
For financial institutions preparing their financial statements on an IFRS basis, the introduction of IFRS 9’s ECL provisioning, to replace IAS 39’s incurred loss provisioning, represented a fundamental change. Concepts such as staging, significant increase in credit risk and forward-looking economic scenarios were introduced. Effective disclosure to unpack ECL is essential if ECL is to be understood and used. This objective, to provide effective disclosure, led to the creation of the DECL Taskforce - a partnership between the preparer community and the investor and analyst community, sponsored by the Financial Conduct Authority (‘FCA’), the Financial Reporting Council (‘FRC’) and the Prudential Regulatory Authority (‘PRA’).
Continue reading
This content is not freely available. To access 'Large UK banks work with users to enhance sense-making of IFRS 9' you need to be one of the following:
-
ACA student
-
This content is available to ACA students. If you want to start the ACA qualification there are several routes you can take
-
Business and Finance Professional
-
An internationally recognised designation and professional status from the ICAEW.
-
Financial Services Faculty: Banking
-
Expert analysis of trends and challenges in banking and technical resources in financial reporting, auditing and regulation.
-
Financial Services Faculty: Insurance
-
Expert analysis of trends and challenges across insurance services and technical guidance on new standards and regulation.
-
Financial Services Faculty: Investment Management
-
Expert analysis, specialist support and trusted technical guidance for investment management professionals.