New EU accounting standard a challenge for banking industry, says ECB chief
Daniele Nouy, the European Central Bank's supervisory chief, has said that the introduction of a new accounting standard for financial instruments will present a challenge for the banking industry.
The chair of the Supervisory Board of the European Central Bank said modelling for expected losses will be particularly affected.
The introduction of the International Financial Reporting Standard 9 (IFRS 9), which is due to take effect from 2018, is the subject of much debate in the EU accountancy sector.
Nouy made her comments in a speech in Paris about the new rule, which came about after calls for action by leaders of the Group of 20 economies during the financial crisis.
Although the new rule still needs formal European Union endorsement, meaning there are still some doubts about the start date, a senior regulator at the Bank of England, Paul Ebling, said Britain's top banks must comply from 2018 even if there is delay elsewhere.
Nouy made her comments in her role as Chair of the Supervisory Board of the Single Supervisory Mechanism whilst speaking at the European Confederation of Institutes of Internal Auditing (ECIIA) conference in Paris.
Nouy said: "In the near future, an important issue requiring cooperation between external auditors and internal audit functions of credit institutions will be the implementation of IFRS 9 on financial instruments.”
"The completion of this accounting standard as one of the responses to the financial crisis will bring major changes and challenges to the industry, mainly regarding the implementation of the new expected loss model," she explained.
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