OVERVIEW

FINREP is based on the EU’s CRD IV which contains the prudential rules for banks and financial and investment institutions. Looking back at the previous regulatory reporting requirements, FINREP presents a significant new increase in regulatory granularity from the financial data aspect.

Containing over 65 reporting templates, FINREP requires data from the core financial accounting related to the balance sheet figures (Assets, Liabilities, Equity and the Income Statement) and the breaking down and merging of this core data with additional information from non-core data such as collateral and forbearance details amongst others.

THE CHALLENGES

ORGANISATIONAL

The reporting for FINREP, similarly to COREP, involves a process of frequently gathering data which is traditionally found in various silos (possibly across departments), mapping and converting this data to the necessary standards.

OPERATIONAL/TECHNICAL

Having data disseminated across system makes it very difficult to not only prepare FINREP reports but also make use of this data for internal analysis and reporting. Challenges operationally, revolve around actually producing the reports from the previously prepared data and managing the various updates as issued by the EBA through the DPM changes.

Financial Reporting ensures harmonisation and convergence in supervisory reporting is maintained. It applies to all credit institutions that consolidate their financial reports based on IFRS. The templates covered under FINREP include:

  • Primary Statements (Balance Sheet and Income Statement)

  • Primary Statements (Comprehensive Income and Equity)

  • Disclosure of Financial Assets and Liabilities

  • Financial Asset Disclosures and Off Balance Sheet Activities

  • Financial Asset Disclosures and Off Balance Sheet Activities and Non-Financial Instrument Disclosures

These reports have to be filed annually with the National Supervisory Authority of the country.

THE WHO, WHAT, WHEN OF FINREP REPORTING

WHO

CREDIT INSITUTIONS AND INVESTMENT FIRMS ACROSS 31 COUNTRIES IN EUROPE

WHAT

COMMON REPORTS (COREP) AND FINANCIAL REPORTS (FINREP)

WHEN

MONTHLY, QUARTERLY (COREP) AND QUARTERLY (FINREP)

BRSANALYTICS is an effective integrated solution which covers the FINREP reporting requirement from data aggregation, transformation and merging to the final reporting pack to be submitted to the central regulatory government body. The application imports the raw data from various sources, processes and transforms this data; ready to be used by the customer for reporting or any analysis required, thus reducing the burden placed on the organisational and operational level of an institution.

BRSANALYTICS FINREP BUSINESS BENEFITS

  • Reducing the burden of maintaining the increasingly-changing reports; as any changes will be catered for by BRSANALYTICS through regular updates (e.g. FINREP IFRS 9 compliance)

  • Using data which is integral and is analysed through all the reporting ensuring a single version of truth for the same data (which reduces analysis between one reporting pack to another in terms of data noise recognition and reduction through manual adjustments)

  • Elimination of unnecessary internal regulatory computation maintenance

  • Increased employees’ satisfaction as focus is on higher quality tasks rather than filling in countless FINREP and COREP sheets (including country specific data which have 300+ sheets for every schedule such as F_20.04, F20.05 etc.)

  • Less error prone due to automation and automatic population of data (if an exposure in a new country is recognised in a particular month this requires no intervention from finance and is automatically displayed in the appropriate formula file)

  • Workload reduction through more efficient streamlined processes

  • Proficient handling of regulators’ enquiries

  • Facilitated business analysis over different periods of time; e.g. monthly view of non-performing accounts/provisioning amounts to certain sectors.

IFRS 9

This accounting standard aims to strengthen accounting recognition of loan-loss provisions, valuation of uncertainty and provisions for on and off balance sheet exposures. The idea is to shift towards a higher quality global accounting standard.

IFRS 9 integrates accounting, risk and business which makes it somewhat complex and time-consuming to implement across an organisation and necessitates new processes and IT changes to fulfil new accounting and disclosing requirements.

Implications for the bank are ensuring a smooth accounting internal changeover from IAS 39 standard to IFRS 9 and possibly upgrading of internal financial applications. BRSANALYTICS is a flexible solution which aggregates multiple data sources provided by the bank and provides automatic placement and data population in the FINREP regulatory returns. Our team has investigated the IFRS9 impact on the BRSANALYTICS FINREP solution, and we can assure that from the draft regulations available, our FINREP solution will be made IFRS9 compliant ensuring a smooth transition from one reporting period to the next due to a phased approach to be adopted with the client.

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