The Basel Committee on Banking Supervision (BCBS) has published a consultative document containing draft guidelines on accounting for expected credit losses.

The draft guidelines set out 11 fundamental principles with commentary which are designed to set out supervisory requirements on sound credit risk practices associated with the implementation and on-going application of expected credit loss accounting models. Such practices include all aspects of a bank’s procedures for managing credit risk. However, for the purposes of the consultative document, the scope of credit risk practices is limited to those that affect the assessment and measurement of allowances under the applicable accounting framework.

The requirements in the consultative document are equally applicable under all accounting frameworks. For jurisdictions in which expected credit loss accounting frameworks are not required, the BCBS expects that the relevant aspects of the guidance related to sound credit risk practices will be applied.

The deadline for comments on the consultative document is 30 April 2015.

View Guidance on accounting for expected credit losses issued by the Basel Committee, 2 February 2015