Introducing International Financial Standards to Iraqi Banks
Improving disclosure standards, presentation formats, and overall transparency in financial reporting.

Panel Participants

• Moderator: David Bufton, Senior Public Services Advisor, BearingPoint
• Robert Viernum, Senior Accounting and Auditing Advisor, USAID Izdihar Project
• Abdul Razzak Al-Saa’di, Chairman, Iraq Securities Commission
• Waleed Eidy, Assistant Director General, Supervision Department, Central Bank of Iraq
• Kamel Gailani, Vice President, National Bank of Iraq

Topics Discussed

1. Shortcomings of current bank financial statement presentation standards
2. Areas where increased disclosure/transparency are required
1. Classification of loans
   1. Loan loss allowance to appear in balance sheet (Gross Loans, Less Allowance, Net Loans)
   2. Explanation of the basis for calculation of the Loan Loss Allowance
   3. Accompanying notes to show
      1. Percentage of portfolio at risk
      2. Movement of loans among the various classification categories during the period under review
      3. Collections and write-offs
      4. Improved disclosure of related-party lending
2. Valuation of investments
   1. Lower of cost or market:  valuation method must be clearly explained
   2. Differentiation between investments held on behalf of customers and those for own account
   3. Establishment and disclosure of reserves on investment portfolio
3. Past due amounts to be removed from “Accounts Receivable”
4. Suspense interest to be removed from “Accounts Receivable”
5. Overall breakout of significant amounts from both “Accounts Receivable” and “Accounts Payable” and complete disclosure of their contents
6. Income Statement
   1. Policy regarding interest accrual
   2. If interest paid in advance, are amounts credited income for current period’s income only or for life of loan?
   3. Non-reporting of interest accrued on past due loans as income
   4. Sources of income clearly identified (interest income from loans and advances, on funds’ placements, on investments, etc.)

Reference Works

Al-Saa’di, Abdul R. “Corporate Disclosure in the Iraqi Securities Market”. February 2006.

Al-Saa’di, Abdul R. Presentation. April 2007.

“Basel Committee on Banking Supervision Core Principles Methodology, Principle 22:  Accounting and Disclosure”. (Reference document: Bank for International Settlements (BIS), Basel Committee on Banking Supervision. Enhancing Bank Transparency, Available: http://www.bis.org/publ/bcbs41.htm )

Central Bank of Iraq.  “Instructions to Banks Regarding Credit Portfolio”.

Viernum, Robert. “Core Principles Methodology”. October 2006.

Viernum, Robert. “Review of the Board of Supreme Auditors of the Republic of Iraq Competencies in the Professions of Accountant and Auditing”. June 2004.

For additional information on summit presentations and proceedings, contact us at communications@izdihar-iraq.