56. The use of temporary adjustments requires the application of significant judgement and creates …

The use of temporary adjustments requires the application of significant judgement and creates the potential for bias. In order to avoid the creation of potential for bias, temporary adjustments should be directionally consistent with forward-looking forecasts, supported by appropriate documentation, and subject to appropriate governance processes.

4.2.4 Principle 4 — Adequacy of the allowance

A credit institution’s aggregate amount of allowances, regardless of whether allowances are determined on a collective or an individual basis, should be adequate and consistent with the objectives of the applicable accounting framework.

1. Overview

1.1 References

1.2 Identified Requirements

1.3 Related Standards

2. Identified Requirements

3. Related Standards

• EBA - Published by the European Banking Authority at https://www.eba.europa.eu/