Business consulting services
Our business consulting services can help you improve your operational performance and productivity, adding value throughout your growth life cycle.
Business process solutions
We can help you identify, understand and manage potential risks to safeguard your business and comply with regulatory requirements.
Business risk services
The relationship between a company and its auditor has changed. Organisations must understand and manage risk and seek an appropriate balance between risk and opportunities.
As organisations become increasingly dependent on digital technology, the opportunities for cyber criminals continue to grow.
Forensic and investigation services
At Grant Thornton, we have a wealth of knowledge in forensic services and can support you with issues such as dispute resolution, fraud and insurance claims.
Mergers and acquisitions
Globalisation and company growth ambitions are driving an increase in M&A activity worldwide. We work with entrepreneurial businesses in the mid-market to help them assess the true commercial potential of their planned acquisition and understand how the purchase might serve their longer- term strategic goals.
Recovery and reorganisation
Workable solutions to maximise your value and deliver sustainable recovery
Transactional advisory services
We can support you throughout the transaction process – helping achieve the best possible outcome at the point of the transaction and in the longer term.
We provide a wide range of services to recovery and reorganisation professionals, companies and their stakeholders.
The International Financial Reporting Standards (IFRS) are a set of global accounting standards developed by the International Accounting Standards Board (IASB) for the preparation of public company financial statements. At Grant Thornton, our IFRS advisers can help you navigate the complexity of financial reporting from IFRS 1 to IFRS 17 and IAS 1 to IAS 41.
Audit quality monitoring
Having a robust process of quality control is one of the most effective ways to guarantee we deliver high-quality services to our clients.
Global audit technology
We apply our global audit methodology through an integrated set of software tools known as the Voyager suite.
Corporate and business tax
Our trusted teams can prepare corporate tax files and ruling requests, support you with deferrals, accounting procedures and legitimate tax benefits.
Direct international tax
Our teams have in-depth knowledge of the relationship between domestic and international tax laws.
Global mobility services
Through our global organisation of member firms, we support both companies and individuals, providing insightful solutions to minimise the tax burden for both parties.
Indirect international tax
Using our finely tuned local knowledge, teams from our global organisation of member firms help you understand and comply with often complex and time-consuming regulations.
Innovation and investment incentives
Dynamic businesses must continually innovate to maintain competitiveness, evolve and grow. Valuable tax reliefs are available to support innovative activities, irrespective of your tax profile.
Private client services
Our solutions include dealing with emigration and tax mitigation on the income and capital growth of overseas assets.
The laws surrounding transfer pricing are becoming ever more complex, as tax affairs of multinational companies are facing scrutiny from media, regulators and the public
Tax policies are constantly evolving and there are a number of complex changes on the horizon that could significantly affect your business.
The largest six global accounting networks release a paper summarising expectations regarding implementation of IFRS 9 impairment requirements for systemically important banks.
The Global Public Policy Committee (GPPC), a global forum of representatives of the six largest international accounting networks, released The implementation of IFRS 9 impairment requirement by banks (the paper). The paper is addressed to the audit committees of systemically important financial institutions and represents the consensus views of the GPPC members regarding key matters for the implementation of the impairment requirements of IFRS 9.
Summary of the paper
The introduction of new requirements for the accounting of expected credit losses (ECL) in IFRS 9 financial instruments will be a significant change to the financial reporting of banks when required in 2018.
Given the importance of banks in the global capital markets and the wider economy, the effective implementation of the new standard has the potential to benefit many. Conversely, a low-quality implementation based on approaches that are not fit for purpose has the risk of undermining confidence in the financial results of banks.
The paper is designed to help audit committees evaluate management’s progress toward a high quality implementation of the impairment requirements of IFRS 9. To this end, the paper is organised into two main sections:
1 Areas of focus for those charged with governance
The first section of the paper addresses the following key areas:
The importance of strong governance and controls surrounding ECL models and processes – the paper highlights that areas of the finance function will provide key inputs to the ECL estimation process (such as forecasts of future macroeconomic conditions) and will be subject to auditor scrutiny in a new way.
Considerations regarding sophistication and proportionality – the paper notes that the GPPC networks believe that there is no one size fits all approach and do not expect the same level of sophistication of implementation across all institutions and all portfolios. However, the GPPC networks do expect the sophistication of implementation to be proportionate to the complexity and materiality of the portfolio and material and complex portfolios will require a sophisticated approach.
Key issues on transition – the paper acknowledges that IFRS 9 builds upon existing credit practices, but may also require the development of new processes specifically for the estimation of ECLs pursuant to IFRS 9.
Ten questions those charged with governance may wish to discuss – the paper provides questions that audit committees may wish to discuss with their management team to help assess the quality of management’s implementation of IFRS 9’s impairment requirements.
2 Modeling principles
The second section of the paper addresses and discusses the following key areas:
ECL methodologies – the overall framework for estimating 12-month and lifetime ECLs under IFRS 9
Default – there may be different definitions of default currently used by financial institutions – legal definitions, internally used credit definitions, and regulatory definitions, amongst others. This area discusses how banks might define default for purposes of IFRS 9 and deal with these divergent definitions
Probability of default – both 12-month probabilities of default (PDs) and lifetime PDs may be calculated for IFRS 9 and their relationship to regulatory definitions.
Exposure – how exposure at default (EAD) and the period of exposure may be calculated for IFRS 9 and their relationship to regulatory definitions
Loss Given Default (LGD) – how LGD may be calculated for IFRS 9, specifically focusing on the incorporation of forward-looking information, and its relationship to regulatory definitions.
Discounting – the interaction of the use of the effective interest rate (EIR) and discounting under IFRS 9, in particular questioning whether the current use of approximations of the EIR under IAS 39 will remain appropriate for IFRS 9 ECL estimation purposes.
Staging assessment – techniques and approaches institutions may use in approaching the staging assessment for IFRS 9.
Forward-looking information – how banks may incorporate different forward-looking information into its IFRS 9 ECL estimates, including the consideration of multiple forward looking scenarios.
Each of the above areas within the modeling principles section present the discussion in terms of a sophisticated approach that may be appropriate for more complex or material institutions or portfolios; a simpler approach that may be appropriate for less complex or material institutions or portfolios; and also approaches that would be inconsistent with a high-quality implementation of IFRS 9.
We expect views of regulators, auditors and preparers to evolve over time, and this paper is by no means the last word on what will constitute a high quality IFRS 9 ECL estimation process. The paper is not authoritative and its primary audience is systemically important financial institutions. However, we believe the paper is an important document that should be considered by all banks as they endeavour to implement IFRS 9. Similarly, banks should also consider the guidance in the Basel committee on banking supervision’s guidance on credit risk and accounting for expected credit losses.
Please download the associated press release here [PDF, 180KB] [ 176 kb ].
If you would like to discuss any areas of this paper in more detail please contact:
T +1 214 561 2385