Manage Collective-Level Expected Credit Losses for US GAAP

WRITERS NOTE: NEEDS REVIEW

Eagle’s accounting solution allows you to process Expected Credit Losses (ECL) at the collective level (group-level, or pooled approach) for US GAAP portfolios where the regulatory category and investments are classified as Held-To-Maturity (HTM).

Collective level ECL processing involves the creation of a dummy asset using the processing security type, ECLGRP, which represents a group of assets/individual securities held by a portfolio for which expected credit losses exist. It provides a way for an entity to account for expected credit losses within its portfolio without having to book ECL to the individual securities.

Expected credit losses (EGL) result from all possible default events over the expected life of a financial instrument. REPLACE ?: 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.

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.

• 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.

• Cancel any ECL transaction so there is a way to eliminate incorrect transactions from Eagle Accounting.

• Report on expected credit losses.

WRITERS NOTE: confirm valuation information is accurate.