WIREDGOV

The Financial Reporting Council (FRC) welcomes the publication today of the report by the Taskforce on Disclosures about Expected Credit Losses (‘Taskforce’). 

The expected credit losses (ECL) impairment model introduced by the new accounting standard IFRS 9 ‘Financial instruments’ will have a significant effect on how banks calculate loan loss provisions.  Given the complexity of these models and the high degree of management judgement involved in these calculations, high quality disclosures are an essential element of successfully implementing this new requirement.  These disclosures should, among other things, set out clearly the accounting judgments exercised by management and provide information about the estimation uncertainty inherent in the calculations. 

In order to facilitate the provision of high-quality disclosures, the FRC together with the 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.

The FRC encourages all banks, building societies and credit institutions to consider the recommendation of the Taskforce when preparing their disclosures in the forthcoming reporting season.

Report of Taskforce on Disclosures about Expected Credit Losses (PDF)
Co-chairs letter to CEOs of PRA, FCA, FRC (PDF)

Notes to editors:

1. The FRC’s mission is to promote transparency and integrity in business.  The FRC sets the UK Corporate Governance and Stewardship Codes and UK standards for accounting and actuarial work; monitors and takes action to promote the quality of corporate reporting; and operates independent enforcement arrangements for accountants and actuaries. As the competent authority for audit in the UK the FRC sets auditing and ethical standards and monitors and enforces audit quality.
2. All Press enquiries should be directed to:

• Peter Timberlake, Head of Communications, on telephone: 020 7492 2397/ 07768 502332, or email: p.timberlake@frc.org.uk.
• Rita Carolan, Communications Manager, on telephone: 020 7492 2307/ 07428 149096 or email: r.carolan@frc.org.uk.
• Alana Sinnen, Communications Manager, on telephone: 020 7492 2395/ 07949 005526 or email: a.sinnen@frc.org.uk.

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Contact the Press Office

Rita CarolanCommunications Manager

• +44 020 7492 2307
• r.carolan@frc.org.uk