8. These guidelines build on Article 74 of Directive 2013/36/EU which states that institutions must …

These guidelines build on Article 74 of Directive 2013/36/EU¹⁶ which states that institutions must have adequate internal control mechanisms, including sound administration and accounting procedures that are consistent with and promote sound and effective risk management; and Article 79(b) and (c) of that Directive, which states that competent authorities must ensure that institutions have internal methodologies that enable them to assess the credit risk of exposures to individual obligors and at the portfolio level, and effective systems for the ongoing administration and monitoring of the various credit risk-bearing portfolios and exposures, including for identifying and managing problem credits and for making adequate value adjustments and provisions, respectively. In addition, Article 88(1)(b) of Directive 2013/36/EU states the principle that ‘the management body must ensure the integrity of the accounting and financial reporting systems, including financial and operational controls and compliance with the law and relevant standards’. Finally, as specified in Article 104(1) of Directive 2013/36/EU, competent authorities may apply supervisory measures including requiring credit institutions to reinforce of the arrangements, processes, mechanisms and strategies implemented in accordance with Articles 73 and 74 (Article 104(1)(b)), the application of a specific provisioning policy or treatment of assets in terms of own funds requirements (Article 104(1)(d)).

¹⁶ Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC (OJ L 176, 27.6.2013, p. 338).

1. Overview

1.1 References

1.2 Identified Requirements

1.3 Related Standards

2. Identified Requirements

3. Related Standards

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