ITBusiness.ca

4 tips from FICO for banks seeking IFRS 9 compliance

Shutterstock.com

Financial institutions across the globe have been in a tizzy since new regulations were announced that banks would need to get a better grasp on their data. But one finance-focused data analytics firm is working to address banks’ concerns and help them get a grip on their implementation plans.

FICO is offering up some pearls of wisdom around the new rules published in the ninth edition of International Financial Reporting & Assurance Standards (IFRS 9). The data analytics firm aims to walk organizations through the final steps of the implementation process and ensure they meet the Nov. 1, 2017, deadline for Canadian institutions.

Originally released in July 2014, the new standards of IFRS 9 are an industry response to last decade’s financial crisis. Hensel says the International Accounting Standards Board (IASB) issued IFRS 9 to correct the overly optimistic accounting practices used in the 2000s, which partially caused the Great Recession of 2009.

The new IFRS 9 regulations mandate that banks report on bad loans they’ve issued and also predict which loans will turn sour down the line and track them on their financial statements. These increasingly complex predictions require financial institutions to get their data in line and substantially reform their approach to hedge accounting.

According to Daniel Hensel, principal consultant of financial services at  FICO, the regulations pose a number of other challenges for organizations, including:

As a result of all these challenges, many financial institutions across Canada are clamouring to meet the Nov. 1, 2017, deadline as organizations struggle through the implementation process and work to understand the downstream impacts of the new accounting standards.

“We hope companies understand the most efficient and cost-effective path for meeting the deadline and, just as importantly, doing so with as little impact to profitability as possible,” Hensel says.

Hensel offers a few pieces of advice for banks facing these challenges, including:

Exit mobile version