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The use of International Financial Reporting Standards (IFRS) for Prudential and Regulatory Purposes

Workshop for Polish Financial Supervisors,
1 - 2 September 2010, Warsaw


As part of the Polish-Swiss cooperation program, the World Bank’s Centre for Financial Reporting Reform (CFRR) organized a two-day workshop in Warsaw for Polish financial sector regulators. Participants included representatives of the Polish Financial Supervision Authority (KNF), the National Bank of Poland (NBP) and the Ministry of Finance.

Summary


Objectives

The workshop is part of a broader World Bank project on institutional and regulatory capacity building for corporate sector financial reporting and auditing at the national level, which was officially launched in December 2009. The workshop’s main objectives were:

  • to enhance participants’ knowledge and understanding of contemporary issues in IFRS and their implications for the use of IFRS financial statements for capital management and prudential regulatory purposes; and
  • using practical case studies, to help participants apply this knowledge in analyzing IFRS financial statements and identifying critical elements of information needed for effective banking supervision.

Description

Ten participants from the Polish Financial Supervision Authority, the National Bank of Poland and the Ministry of Finance attended the workshop. These included representatives with direct banking supervisory responsibilities as well as individuals with broader regulatory responsibilities in relation to various aspects of financial and capital markets. The seminar was led by two distinguished experts in the field, 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. John A. Carchrae from the Assessment and Advisory Group in the World Bank CFRR moderated the workshop.

During the first day of the workshop, Mr. Göbel and Mr Wassmann presented the general principles of the Basel II approach to the regulation of bank capital, with a particular emphasis on Basel II’s treatment of credit risk and the inter-relationship with the approach to provisioning for loan losses under IFRS. They also highlighted some of the key issues in analyzing bank financial statements prepared under IFRS, illustrating those issues by reference to extracts from a commercial bank’s financial statements.

On the second day, participants had the opportunity to apply their knowledge to a practical case study in which they were asked to analyze some illustrative examples of IFRS financial statements, including applying the CEBS guidelines on prudential filters for regulatory capital. The session concluded with a discussion of current developments relating to the IASB’s revision of IAS 39 in light of issues and concerns identified in the context of the financial crisis.

Results

The workshop allowed a relatively small group of financial supervisors to enhance their knowledge and skills in a specialized area by exploring issues in depth in a facilitated interaction with experts in the field. It also provided participants from different areas of the financial supervisory system with an opportunity to work in small teams to apply the knowledge they gained to practical case studies. Comments received during the workshop indicated that it was successful in enhancing participants’ practical understanding of interactions between IFRS and Basel II, particularly in relation to the assessment of loan loss provisions.

Information on FRTAP


About the FRTAP

This initiative was funded by the Swiss-Polish Cooperation Program under the Financial Reporting Technical Assistance Program (FRTAP). FRTAP forms part of the Swiss Contribution (the enlargement contribution) to reduce economic and social disparities within the enlarged EU for those member states that joined the EU from 2004 onwards. It is managed by the CFRR.

The FRTAP for Poland seeks to support policymaking in the area of accounting and auditing by identifying areas where better regulation and/or enforcement can contribute to an improved business environment and also to assist in enhancing the capacity to carry out certain regulatory activities. In Poland, the program is entitled “Institutional and Regulatory Capacity Building for Corporate Sector Financial Reporting and Auditing at the National Level”




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