IFRS 9 provisions: preparing data to calculate expected credit losses
Preparing an IFRS 9 provision calculation: loan portfolios, payment history, risk assessment, scenarios, model validation and links to accounting.
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IFRS 9 provision calculation
We help assess risks and organise provision calculations under IFRS 9.
How we can help
- Assessing risks of loan non-repayment, loss of collateral or decline in collateral value.
- Calculating the relevant provisions.
- Recommendations on optimising provision expenses and organising the calculation.
- Improving the calculation and accounting process.
- Preparing reports based on the calculation, taking financial and tax accounting requirements into account.
We agree on the services, timeline and fees based on your company's activities and needs.
When to contact us
- A financial organisation needs to organise provision calculations and connect them to accounting data.
- The existing calculation is difficult to explain or reproduce because source data are fragmented.
- The loan portfolio or collateral has changed, and the impact on the calculation needs to be understood.
What to prepare for the discussion
- A description of the loan portfolio and the required calculation date.
- Available data on outstanding debt, payments and arrears.
- Collateral information and available valuations, where collateral is included in the calculation.
- The existing calculation procedure and examples of previous results.
- A description of how the calculation connects to accounting data and reporting.
How we approach the task
Check the starting data
We review available loan and collateral data, the calculation date and existing workflow. We identify gaps and discrepancies that prevent consistent use of source information.
Perform the agreed calculation
We assess risks relevant to the task and calculate provisions on the agreed basis. We discuss assumptions and information that materially affect the result and require clarification from the company.
Connect the result to accounting
We prepare calculation results and recommendations for organising the process. We review how data are reflected in accounting and reports so the next calculation uses clear and comparable source information.
What outcomes we agree on
- Provision calculations within the agreed scope and as of a specified date.
- Explanations of the data used and matters affecting the result.
- Recommendations for organising calculations, accounting treatment and reporting.
Before we start
Frequently asked questions
Is the total loan portfolio amount sufficient?
A meaningful review usually requires data showing the debt position and the calculation method used. The initial consultation can start with a description of available exports; the precise information needed is then agreed.
Can you review an existing calculation process?
Yes. The task may involve organising and improving an existing process. It is useful to prepare a description of source data, a sample calculation and an explanation of how the results feed into accounting.
Can a reduction in provisions be promised in advance?
No. The outcome depends on the data and a justified risk assessment. The objective is an explainable calculation and an improved process, not adjusting the amount in advance to achieve a desired financial figure.
Knowledge to inform your decisions
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