Governance processes and controls are an essential part of any bank's control environment. They will be particularly critical for banks implementing IFRS 9 Expected Credit Loss (ECL) and making key decisions on accounting policies and how practically to implement the new impairment requirements. The importance of strong governance is further reinforced by the draft Basel Guidance, which emphasises the need for a robust and high quality implementation.
This 'In Depth' outlines some of the key governance challenges we have seen in practice when making IFRS 9 ECL accounting policy and implementation decisions, as well as how best to respond. Although primarily focused on banks, many of the areas discussed will also be relevant to other financial institutions implementing IFRS 9 ECL.
Although not covered in this publication, banks will also need to consider many other aspects of governance during their IFRS 9 implementation projects and beyond. These include data governance, model governance and governance & controls over the ongoing 'business as usual' IFRS 9 reporting process.