There are many causes of the current financial turmoil. ACCA believes, however, that a failure in corporate governance is a major contributor to the credit crunch. Regulatory boxes may have been ticked but fundamental principles of good governance were breached. The charitable explanation for this failure is that those responsible did not understand the risks that were being taken.
Migration to International Financial Reporting Standard (IFRS) 9, or its local equivalent, is likely to create operational challenges across many of Asia-Pacific's (APAC) banking systems. These issues would have a negative initial effect on capital, and potentially raise the volatility of earnings and regulatory capital ratios, says Fitch Ratings.