Updated guidance issued on expected credit loss disclosure
News types: Publications
Published: 16 December 2019
The Financial Reporting Council (FRC) has today welcomed new guidance issued by the Taskforce on Disclosures about Expected Credit Losses (DECL).
The updated guidance describes what good disclosures for IFRS 9 Expected Credit Loss accounting (ECL) should look like. The guidance is particularly relevant for UK-headquartered banks, building societies, and a wide group of preparers in calculating loan loss provisions.
The updated guidance builds on the requirements in the Taskforce’s first report IFRS 7 Financial Instruments: Disclosures, issued in November 2018. It includes illustrative examples showing how the information described in the first report can be presented in a way that enhances comparability between banks
Given the complexity of ECL models and the high degree of management judgement involved, high quality disclosures are essential. 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.
The FRC encourages all banks, building societies and credit institutions to consider the recommendations of the Taskforce when preparing their disclosures in the forthcoming reporting season.
The DECL Taskforce is sponsored by the FRC, the Financial Conduct Authority and the Prudential Regulation Authority.
New guidance
Notes to editors
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