About Asset-Level ECL for IFRS

This section introduces some concepts used with asset-level Expected Credit Losses (ECL) for IFRS accounting bases.

About the Non-US Treatment ECL Method

Eagle’s accounting solution offers two methodologies for processing for asset-level Expected Credit Losses. It uses the ECL Method of Non-US Treatment for processing IFRS accounting bases. If you use US GAAP accounting bases, the ECL Method of US Treatment is also available.

About Tracking Stages with Asset-Level ECL

With asset-level ECL used in conjunction with IFRS, you can track changes related to the stage/status of credit quality of fixed income financial instruments. You identify the stage at the transaction level rather than for the SMF. These statuses include:

• Stage 1. Have not deteriorated significantly in credit quality or have low credit risk.

• Stage 2. Deteriorated significantly in credit quality since initial recognition (unless low credit risk at reporting date) and not having objective evidence of impairment.

• Stage 3. Objective evidence of impairment at reporting date.

About Event Priority for Asset-Level ECL Events

In Eagle Accounting every event has an event priority which tells the system in what order to process events when rollback replay occurs. The event priority for Asset-Level Expected Credit Loss events ensures that ECL events are processed subsequent to any open and close transactions that occur on the same trading day with the exception of Impairments. This ensures more accurate ECL processing because the calculation for ECL is typically based on the end of day position of the underlying asset. For more information, see About Event Types and Event Priorities.