Bank of Mauritius: Guideline on Credit Impairment Measurement and Income Recognition

Consistent with the requirements of International Accounting Standards and International Financial Reporting Standards, this Guideline sets out the conceptual framework for credit impairment measurement and income recognition as it applies to financial institutions in Mauritius.

The Guideline outlines prudential processes to identify weaknesses in credits granted, outlining benchmarks for identifying and providing for anticipated credit losses in a timely fashion.

The objective of this Guideline is to bring about a balance between the application of international accounting norms and prudential norms respecting credit impairment measurement and income recognition with a view to ensuring that financial institutions have adequate processes for determining allowance for credit losses, in a timely manner, and the carrying amounts of credit portfolio recoverable values.

The Guideline is not intended to deal with each and every provision of the current accounting standard pertaining to impairment and uncollectibility of financial assets, that is IAS 39 “Financial Instruments: Recognition and Measurement” or any subsequent International Financial Reporting Standard, in replacement of IAS 39. Financial institutions are advised to refer directly to the Standard for complete treatment of the subject. However, financial institutions are henceforth required to take on board the prudential norm on credit classification and credit impairment measurement in the preparation of their financial statements as described under section 8.