Expected Credit Loss (ECL) Computation: A Comparative Study of 3 Banks - Wipro

Harry1220 Jan, 2022Technology

The global financial crisis (GFC) in 2008 exemplified the weaknesses in the current accounting standards & practice (IAS 39 Financial Instruments), which adopts the incurred loss model for impairment of financial assets. The challenge with the incurred loss model is that impairment losses and the resulting write-downs in the reported value of financial assets can only be recognized when there is evidence that they exist (i.e. have been incurred). Post GFC 2008, at the request of the G20 and the Financial Stability Board, the International Accounting Standard Board (IASB) stepped up its work to replace IAS 39. In July 2014, the IASB introduced the International Financial Reporting Standard (IFRS) 9.