The report focuses on the audit of expected credit losses (ECL) for larger banks, highlighting the complexity of the rules and need for auditors to improve their credit risk assessments.

IFRS 9 is a complex area to audit and remains a continued challenge for auditors of banks, the regulator said.

The Big Four audit firms have made significant investment in their IFRS 9 audit methodologies, and the review identified several examples of good practice, including around the auditing of ECL models and assumptions. However, it also highlighted areas for improvement, such as the guidance provided on testing judgmental aspects of significant increase in credit risk.