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IFRS for Prudential and Regulatory Purposes

3 - 4 May 2010, Vienna

As part of the REPARIS program, the CFRR organized a two-day seminar on the use of IFRS for prudential purposes in Vienna on 3 - 4 May 2010.


Summary


Objectives

The seminar was held following requests from participants in the launch event for "IFRS for Regulators" for training based on practical examples of issues such as the treatment of provisioning for loan losses. The main objectives of this second seminar were to:

  • familiarize participants with the main features of the IFRS 9 project (the IASB's new reporting standard for financial instruments);
  • provide practical examples on the provisioning for loan losses both from a prudential and an accounting point of view using IFRS;
  • review German bank financial statements prepared under IFRS;
  • illustrate how IFRS-based information is used for the purposes of regulatory supervision and the calculation of regulatory capital.


Description

17 participants attended the seminar from Albania, Bosnia and Herzegovina, Croatia, Kosovo, Macedonia, Moldova, Montenegro and Serbia. The seminar was facilitated by Henning Göbel, chief accountant at the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin - the German integrated financial supervisor) and Joachim Wassmann, from the Bundesbank, the German Central Bank.

On the first day Mr. Göbel started with an overview of regulatory objectives including the alignment of capital management, regulatory, and accounting requirements. This was followed by a presentation on the collective assessment of loan impairment. Participants contributed by asking targeted questions and giving their views. In the afternoon Mr. Wassmann presented an analysis of IFRS financial statements and insights into how these could be analyzed.

In a case study exercise on the second day of the seminar, participants prepared a calculation of regulatory capital using prudential filters as defined by Committee of European Banking Supervisors (CEBS). They then presented their results, together with their findings about errors and inconsistencies in a sample of IFRS financial statements, to their peers. The case study built on technical inputs which had been provided by both speakers during the first day.

Results

Comments received from participants' evaluations indicated that they had found the case study approach useful and that they preferred this method of learning to more theory-based approaches.

The seminar improved participants’ practical understanding of the approaches of IFRS and Basel II and, in particular, of the assessment of loan loss provisions. It also improved their ability to review banks’ IFRS-based financial statements; and enhanced their knowledge of the use of CEBS prudential filters for the calculation of regulatory capital.

Videos


Video presentations on
"The Use of IFRS for Prudential and Regulatory Purposes"

Henning Göbel,
chief accountant at the Bundesanstalt für Finanzdienstleistungsaufsicht
(BaFin - the German integrated financial supervisor)

Part 1: "Alignment of capital, regulatory and accounting requirements"

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Part 2: "Collective assessment of loan impairment"

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