12 December 2016

Bank of England: Financial statements - responses to Chapter 3 of CP17/16 - PS36/16

This PRA PS provides feedback on responses to the financial statements (balance sheet and statement of profit or loss) proposals in Chapter 3 (paragraphs 3.1-3.18) of Consultation Paper on Regulatory reporting of financial statements, forecast capital data and IFRS 9 requirements.

This policy statement (PS) also includes the final rules for the new reporting requirements relating to balance sheet and P&L data in the Regulatory Reporting Part of the Prudential Regulation Authority (PRA) Rulebook (Appendix 1), an update  to Supervisory Statement (SS) 34/15, ‘Guidelines for completing regulatory reports’ (Appendix 2) and new returns and instructions (Appendices 3-5).

CP17/16 also consulted on changes to PRA rules and SS34/15 relating to the regulatory reporting of forecast capital data, and included a discussion chapter on reporting of International Financial Reporting Standard 9 (IFRS 9). Feedback and final rules relating to forecast capital data were published on 16 November in PS32/16.

The policy has been designed in the context of the current UK and EU regulatory framework. The PRA will keep the policy under review to assess whether any changes would be required due to changes in the UK regulatory framework, including those arising once any new arrangements with the European Union take effect.

The PRA received ten responses to the CP. Overall the PRA does not consider that the responses received to CP17/16 necessitate significant changes to the proposals. The feedback to responses are outlined in Chapter 2.

Some respondents requested that the PRA delay implementation of the proposals until 2019 to allow firms more time to prepare, as there are a number of other significant banking reforms in progress. The PRA maintains that an implementation date of 1 January 2018 for the new format balance sheet and P&L is necessary, to align with the introduction of the new accounting standard (IFRS 9) for accounting years commencing on or after this date, as the FSA001 and FSA002 currently reported are not compatible with IFRS 9.

Firms that do not have an accounting year end of 31 December 2017 will be able to apply for a rule modification (via the modification by consent process) which would enable them to delay application of the new rules and new format reporting until the start of their financial year beginning in 2018.

The CP proposed that the balance sheet, P&L and Statement of Comprehensive Income (SOCI) FINREP data templates and PRA104-PRA107 would be scheduled on a calendar quarter reporting basis.

As set out in the PS (paragraph 1.5), the PRA will publish details of the systems which will be used by firms to report the new returns by Tuesday 28 February 2017 on the ‘CRD firms - Reporting Requirements’ webpage.

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