FEE responds to EBA consultation on guidance on accounting for expected credit losses

  • FEE (Federation of European Accountants - Fédération des Experts-comptables Européens) (lt green) Image

26 Oct, 2016

In July 2016, the European Banking Authority (EBA) launched a consultation on draft guidelines on credit institutions' credit risk management practices and accounting for expected credit losses. The Federation of European Accountants (Fédération des Experts-comptables Européens, FEE) has responded to the consultation and asks for clarifications regarding the intended interaction between prudential and accounting requirements.

The EBA draft guidelines build on the guidance by the Basel Committee on Banking Supervision (BCBS) in December 2015 on the same matter and feature a detailed section on the application of IFRS 9 Financial Instruments.

FEE states that any alignment at EU level should stay as close as possible to international requirements and the guidance from the BCBS to ensure consistent interpretations of IFRS 9 and achieve a high-quality ECL model across different jurisdictions. As regards the proposed EBA guidelines, FEE fears that their scope is wider than the scope of the BCBS guidelines and stresses that FEE "has the clear expectation that the EBA has not and does not intend to have the authority to establish requirements for financial statements". FEE concludes: "Prudential and accounting approaches cannot be similar and it should be noted that there are important differences".

For more information please access the press release and the consultation response on the FEE website.

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