Supplemental note to External audits of banks - audit of expected credit loss

The Committee is issuing a supplemental note to its 2014 guidance External audits of banks following the implementation of expected credit loss (ECL) accounting frameworks in various jurisdictions that have brought about significant changes for banks and their external auditors. The objective of the guidelines is to contribute to the high-quality audits of internationally active banks by communicating supervisory expectations for the audit of ECL estimates and providing questions that banks' audit committees may ask the external auditor.

The guidance may be most useful for 2021 year-end audits, as audit committees and external auditors require time to consider the guidelines in the context of planning and executing an audit. Nevertheless, audit committees and external auditors may find the guidance helpful for 2020 year-end audits, particularly as they consider the use of forecasts and forward-looking information, the construction of macroeconomic scenarios and weightings, and model performance (including data availability and the need for post-model adjustments).