Loan loss calculation conundrum
Replacing the incurred loss provisioning model remains high on the agenda of accountants, bankers and regulators. The challenge is to find a way to calculate expected loss that satisfies the diverse objectives of all three camps. Can a compromise be reached?
The move to replace the incurred loss model for loan loss provisioning has created plenty of friction between accountants and regulators over the past year. Accounting standard-setters were pushed to draw up alternatives to a model that politicians and regulators accused of exacerbating swings in the economic cycle through late recognition of credit losses. Accountants insisted any new model
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