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Bhutan’s Largest Bank Adopts CARE Risk - ECL and FRA for IFRS 9 Compliance and Automated Reporting

Business and Finance

March 10, 2023

The largest banking institution in Bhutan has taken a significant step towards regulatory compliance by implementing CARE Risk - Early Warning (ECL) and Financial Reporting Automation (FRA). This move enables the bank to generate its financial statements according to International Financial Reporting Standards (IFRS) 9.

Client Profile

One of Bhutan’s leading financial institutions adopted CARE Risk solutions to address the challenges of IFRS 9 compliance and create a unified database for analysis.

Challenges

The bank faced several issues during the implementation process, including:

  • The newness of IFRS 9 in Bhutan
  • Presence of data from two different core banking systems
  • Data quality concerns due to ongoing migration
  • Complications in computing Probability of Default (PD) and Loss Given Default (LGD)
  • Reconciliation issues between General Ledger (GL) balances and transaction balances
  • Generation of financial statements based on IFRS guidelines

Solutions

CARE Risk’s solutions addressed the challenges by:

  • Providing a robust data validation engine for data sanitization and computational accuracy
  • Implementing globally accepted best practices models for timely reporting
  • Automating the computation process using a trigger-based approach
  • Facilitating historical data storage required for PD & LGD computation
  • Providing manual facilities for data unavailability in legacy systems
  • Including efficient user audit trails, controls, workflow, authorization, and hierarchy approvals for auditor concurrence
  • Adding a fully configurable reporting engine for risk-based reports with drill-down features

Benefits

The adoption of CARE Risk’s solutions enabled Bhutan’s Bank to:

  • Become the first financial institution in the country to comply with IFRS reporting norms
  • Enhance accountability, transparency, and integrity within the organization
  • Successfully address reconciliation issues and generate IFRS required set of financial statements