Eagle’s accounting solution allows you to account for expected credit losses for a group or groups of assets within a portfolio/basis. Expected credit losses (EGL) result from all possible default events over the expected life of a financial instrument. Under the impairment approach in IFRS 9, it is no longer necessary for a credit event to have occurred before credit losses are recognized. Instead, an entity should always account for expected credit losses, and changes in those expected credit losses.
Under IFRS 9, expected credit loss applies to financial assets measured at amortized cost, or financial assets measured at fair value-other comprehensive income (FVOCI). Therefore in Eagle Accounting, you can apply group-level expected credit losses only where the regulatory category on the accounting basis is amortized cost or FVOCI.
When accounting for group-level expected credit losses, you can:
Add a dummy asset ID to Reference Data Center (RDC) for ECL positions, so the system has assets specifically used for group-level ECL accounting.
Book ECL against domestic or foreign assets to capture all group-level accounting.
Book ECL against foreign assets where the accounting system properly differentiates between write-up and write-down and account for them differently to properly capture variations in FX rate.
Indicate the credit quality status (Stage 1 or Stage 2) of an ECL position for internal/external reporting.
Cancel any ECL transaction so there is a way to eliminate incorrect transactions from Eagle Accounting.
Account for ECL holdings in Eagle Accounting valuation and capture any FX rate fluctuation in unrealized currency gain/loss to ensure all currency accounting is complete.
WRITERS NOTE: confirm valuation information is accurate. Add new bullet for core reporting?
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