New expected loss impairment model – a challenge for the banks in Bulgaria

Abstract

This article introduces some of the leading works on loan impairment published by supervisory authorities, auditing companies and researchers. It makes analysis of the impairment model on the basis of the expected credit losses introduced with the requirements of International Financial Reporting Standard (IFRS) 9 Financial Instruments effective for periods beginning on or after 1 January 2018. There are a number of research works which show that the senior bankers may in some ways manage the financial result through the impairment, where it is assumed that the new impairment model will bring higher recognized losses. It also makes a comparative analysis of the announced information on the loan impairment and the preparation for the introduction of the IFRS 9 Financial Instruments requirements into the annual financial statements of the public banks in Bulgaria for the period 2013 – 2016.

Keywords

• financial statements
• banks
• impairment model