A Central Bank's Guide to International Financial Reporting Standards

Manuals & Guides, April 5, 2021

Source details

Canonical URL: A Central Bank's Guide to International Financial Reporting Standards

About one-quarter of the world’s central banks apply IFRS with approximately a quarter more looking to IFRS for further guidance where their local standards do not provide enough guidance.
Central banks exhibit significant variation in practice, style, and the extent of financial disclosures in both the primary statements and in the note disclosures due to varied mandates and types of policy operations.
Major accounting firms have created model disclosures intended for commercial banks that are often not totally appropriate for a central bank.
Each central bank following IFRS has largely developed its own disclosures with only limited reference to others.

The application of IFRS across central banks differs based on the mandate of the central bank and the capacity of the accounting profession in the specific jurisdiction.
Central banks, by their nature, are unique in their jurisdiction and do not always have local practices and examples they can follow.
Input from external auditors has been significant, but some audit input is determined by the auditor’s approach for commercial banks rather than central banks.
Auditors do not always fully appreciate the differences between a commercial bank and a central bank, which has a different role and undertakes transactions to meet its policy objectives.
This auditor focus has often led to:
- an over emphasis of items not material in the context of a central bank, and
- insufficient disclosures on operations or accountabilities specific to the functions of the central bank.

Analysis of international practices, such as those undertaken in preparing the model statements in this guide, may help address questions about:
- the structure of the financial statements themselves, and
- the organization of the note disclosures.
Central banks and standard setters should recognize that commercial-bank model disclosures may require adaptation to capture central-bank-specific operations, accountability, and policy objectives.

Evaluate existing commercial-bank model disclosures for relevance and adjust for central-bank-specific transactions and policy operations.
Strengthen dialogue between central banks and external auditors to ensure auditors understand central-bank mandates and materiality in that context.
Undertake comparative analysis of international central-bank practices to inform the structure and content of both primary statements and note disclosures.
Build local accounting capacity where needed to support appropriate IFRS application tailored to central-bank functions.