Reporting on regulatory capital: choices for assurance

ICAEW’s discussion paper on choices for assurance on banks’ capital information and risk-weighted assets.

In 2014 ICAEW was asked by the Prudential Regulation Authority (PRA) to consider how assurance on bank capital ratios and risk-weighted assets might support confidence in these important measures. In preparing this discussion paper we have undertaken stakeholder outreach with bank executives and non-executive directors, regulators in various jurisdictions, EU institutions, investors and analysts during the first half of 2015. We have also continued to work with the PRA, Financial Reporting Council and accountancy firms in developing this paper and taken input from relevant ICAEW committees.

Regulatory capital ratios are key measures of the strength and resilience of banks for regulators, investors, creditors and other stakeholders. This discussion paper sets out the potential benefits of assurance and discusses the choices involved in designing an assurance engagement on capital ratios and related information. We propose developing a standard scope for an assurance report to allow different banks to obtain assurance on a consistent basis. We do not propose any requirement for banks to obtain assurance.

Next steps

We are seeking comments through this discussion paper on our analysis of the issues and, in particular, on the questions it asks. Responses are due by 16 October 2015. Our current intention is to issue an exposure draft of guidance on assurance reports on regulatory capital in late 2015, followed by guidance in 2016.

• Reporting on regulatory capital: choices for assurance