Our goal is to help you familiarise yourselves with the subject and to make decisions while coordinating project activities which cover both subjects. Equally, it is to show the need for coming to an agreement on various points.
This paper is based on International Accounting Standards (IAS) effective as of 1 January 2005, International Financial Reporting Standards together with Exposure Drafts and the Basel Committee’s Revised Framework of International Convergence of Capital Measurement and Capital Standards of 26 June 2004 (Basel II), and on drafts of EU directives based on these standards of 14 July 2004 (amendments to the directive on banks and the directive on the capital requirements).
The similarities and differences that we have described are of key significance to all organisations which work simultaneously on achieving compliance with both IFRS and Basel II minimum capital requirements. The suggestion of using a common database which is included in the asset impairment chapter will, however, only be applicable to those financial institutions striving for the Basel II advanced IRB approach. Amendments to the regulations as well as the implementation of projects will result in further questions (which will to a certain extent be of an individual nature). Therefore we are not claiming that this paper provides a rigorously detailed analysis. We will, however, be most grateful for any comments and for discussing situations not covered by our paper, regarding both IFRS and Basel II. This paper reflects the state of the discussion as at the end of November 2005.
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