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Addressing the Basel Committee’s Guidance on Expected Credit Losses

Published on: 09 May 2016

Much awaited by the banking industry, the Basel Committee issued its final guidance on credit risk and accounting for expected credit losses in December 2015. What is clear is that the Committee’s expectations are high, and the implementation challenges of accounting for expected credit losses are significant, whether applying IFRS 9 as issued by the International Accounting Standards Board (IASB) or the forthcoming changes to US GAAP to be issued shortly by the Financial Accounting Standards Board (FASB). As the IFRS 9 implementation deadline of 1 January 2018 approaches there is strong demand for establishing a consensual industry view across banks, regulators, external auditors and other key stakeholders of a number of hot topics, such as proportionality, materiality, symmetry, incorporation of forward looking information, significant increases in credit risk and practical expedients.

In our publication Addressing the Basel Committee’s Guidance on Expected Credit Losses, we present a snapshot of what we think are the most challenging elements for banks and those charged with governance. We also share our view on some of the most important milestones in delivering this guidance leading up to January 2018.

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