Comment: Guidance on accounting for expected credit losses

Grant Thornton International Ltd is pleased to comment on the Basel Committee on Banking Supervision’s (BCBS) consultative document Guidance on Accounting for Expected Credit Losses (the Guidance). We have considered the Guidance, including the Appendix: Supervisory requirements specific to jurisdictions applying IFRS.

First and foremost, we agree that sound credit risk practices, and the information that flows from them form the bedrock of estimates of ECLs under any accounting framework. To that end, we believe the Guidance has the potential to help create a common understanding of what constitutes sound credit risk practices in the context of ECL models. Such an understanding regarding sound credit risk practices is essential in achieving consistent interpretation and implementation of an ECL accounting framework across jurisdictions.

Additionally, we believe the Guidance has the potential to help improve the development of ECL accounting policies, procedures and practices that are consistent with the applicable accounting framework that, in turn, is the focal point for our work as auditors. Finally, we believe that a single set of authoritative guidance that is applicable to banks across different jurisdictions is more likely to be effective in encouraging high quality implementation of ECL accounting frameworks than if similar efforts were made at national levels.

We also fully support the eleven principles as set out in the bold text in the Guidance.

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