The Group of Governors and Heads of
Supervision of the Basel Committee on Banking Supervision has
agreed on the design of a capital and liquidity reform package.
The proposals change the treatment of various
accounting balances, including an override of local GAAP in favour
of IFRSs in relation to some intangible assets.
Reform proposals expected to affect the
accounting profession include:
- An option to use IFRS in determining the
level of intangible assets if national GAAP resulting in a wider
range of assets, such as certain software assets, being classified
- Definition of the leverage ratio, which would
strengthen the treatment of derivatives relative to the purely
accounting based measure and provide a simple way of addressing
differences between IFRS and GAAP; and,
- Forward looking provisioning. The
Committee proposes to implement the expected loss approach to
provisioning proposed by the International Accounting Standards
The Basel Committee’s proposed reforms were
originally published in December 2009 and the Governors and Heads
of Supervision, which oversees the committee, considered public
feedback before reaching a consensus.
The committee will finalise the
regulatory buffers before the end of the year while the Governors
and Heads of Supervision will finalise the calibration and phase-in
arrangements at their meeting in September.