## Supervisory Roles in Loan Loss Provisioning in Countries Implementing IFRS

_IMF Working Papers, September 15, 2014_

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## Bibliographic details
- Authors: Ellen Gaston, In W Song
- Published: September 15, 2014
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781484381120.001

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### Summary
- Countries implementing International Financial Reporting Standards (IFRS) for loan loss provisioning by banks have been guided by two different approaches: International Accounting Standards (IAS) 39 and Basel standards.
- The paper discusses the different accounting and regulatory approaches in loan loss provisioning, and the challenges supervisors face when there are different perspectives and lack of guidance from IFRS.
- It suggests actions that supervisors can take to help banks meet regulatory and capital requirements and, at the same time, comply with accounting principles.

### Major themes and analysis
- Accounting versus regulatory approaches:
  - Two guiding approaches identified: International Accounting Standards (IAS) 39 and Basel standards.
  - The coexistence of differing perspectives between accounting guidance and regulatory capital frameworks creates supervisory challenges.
- Supervisory challenges:
  - Lack of guidance from IFRS leads to difficulties for supervisors when aligning accounting recognition and measurement with regulatory objectives.
  - Supervisors must navigate differences in loss recognition and provisioning triggers between accounting and prudential frameworks.
- Objective of recommendations:
  - To assist supervisors in helping banks meet regulatory and capital requirements while complying with accounting principles.

### Findings and recommendations (suggested supervisory actions)
- Suggested actions for supervisors to take include steps to:
  - Help banks meet regulatory and capital requirements.
  - Ensure banks comply with accounting principles under IFRS.
  - Address the tensions arising from different perspectives under IAS 39 and Basel standards.

### Publication and metadata
- Title: Supervisory Roles in Loan Loss Provisioning in Countries Implementing IFRS
- Authors: Ellen Gaston, In W Song
- Publication date: September 15, 2014
- Series: Working Paper No. 2014/170
- Issue: 170
- Volume: 2014
- Pages: 41
- DOI: https://doi.org/10.5089/9781484381120.001
- Stock No: WPIEA2014170
- ISBN: 9781484381120
- ISSN: 1018-5941
- Subject: Banking; Capital adequacy requirements; Credit; Credit risk; Financial regulation and supervision; International Financial Reporting Standards; Loan loss provisions; Money
- Keywords: bank; bank supervisor; Capital adequacy requirements; Credit; credit loss; Credit risk; Global; IFRS implementation; impairment loss; International Accounting standard; International Financial Reporting Standards; loan; loan loss provisioning; Loan loss provisions; loss; loss estimate; loss recognition; recognition model; Supervisory role; WP

*IMF Working Paper by Ellen Gaston and In W Song (September 15, 2014), Working Paper No. 2014/170.*

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/31/supervisory-roles-in-loan-loss-provisioning-in-countries-implementing-ifrs-41918_