engleski

Accounting for expected credit losses

This paper discusses the results of the research problem of accounting for expected credit losses. Accounting for expected credit losses should provide users of financial statements useful information about an entity’s expected credit losses on its financial assets and commitments to extend credit. This field of accounting is substantial in banking business. It is inevitable to research accounting for expected credit losses through its effect on banking business regulation. Example of credit losses accounting is illustrated with research of losses in banks of Bosnia and Herzegovina (BiH). Paper discusses IFRS, GAAP and Basel Committee on Banking Supervision guidance on accounting for expected credit losses. Although accounting for expected credit losses was covered by accounting standards, last financial crisis has shown weak spots of the regulation. Delayed recognition of credit losses on loans (and other financial instruments) was identified as a main weakness in existing accounting for expected credit losses model. That is why main interest of accounting in this area is the timing of recognition of credit losses, which is also covered by this paper.

Accounting for expected credit losses ; recognition of credit losses ; expected credit losses in banking business

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