Accounting Standard Normalizer for Financial Services
Global banks face different accounting reporting standards based on jurisdiction, such as with International Financial Reporting Standards (IFRS) 9 and US Generally Accepted Accounting Principles (GAAP). Different accounting methodologies and timelines make it challenging to create a consolidated view of Expected Credit Loss (ECL) for Profit & Loss (P&L) accounting. Current credit risk calculations are done at the transaction level (e.g. per trade), which are a key dependency for accounting calculations which need to be done globally at the instrument / deck level (e.g. per bond).
Synechron’s Accounting Standard Normalizer Accelerator for Financial Services provides the framework for a common Expected Credit Loss solution across different regulations. The accelerator enables users to run real-time profit and loss calculations at an account or desk level (e.g. on a single bond or another financial instrument), easily assessing the future 12-month and lifetime expected losses for the financial instrument. The accelerator delivers a data analytics framework with microservices architecture to input proprietary credit risk models and simultaneously run dependent global ECL calculations using real-time data for the instrument.
Furthermore, the accelerator enables users to export data into accounting reporting systems to enhance their IFRS 9 and US GAAP reporting and gain increased visibility into individual models and their impact across instrument, account, legal and portfolio levels. Individual financial instruments are searchable and are flagged with the risk factors associated with them to determine the proper quant model to apply. The accelerator uses Application Programming Interfaces (APIs), which can be configured/customized to connect to existing systems and input models, as well as to enable outputs to Business Intelligence platforms such as Tableau and QlikView, existing credit risk systems, and books and records.
Real-time profit and loss calculations across reporting standards
Synechron’s Accounting Standard Normalizer Accelerator for Financial Services:
- Is a centralized platform to avoid overlap and redundancies
- Simplifies compliance with IFRS 9 and US GAAP
- Applies Expected Credit Loss across accounting standards
- Dramatically reduces the scale of future projects to implement changes in regulation and reporting standards, State tax law, and other variables
- Significantly reduces quantitative model calibration time
- Enables customizable deployment and re-use of quant models
- Enables quick adjustment to future regulations
- Enables AI additions, such as automated risk factor checks for financial instruments
- Compares results across Accounting Standards
- Can incorporate local interpretations and Basel 3 Credit Models
- Provides a head start for future projects required to implement changes in regulation and reporting standards
Synechron’s Accounting Standard Normalizer Accelerator for Financial Services is an adaptive framework that can be modified to Accelerate building related Regulatory Compliance solutions. Click to read how Synechron is helping clients with real-time profit and loss calculations across reporting standards.
To learn more about Synechron’s Accounting Standard Normalizer Accelerator for Financial Services and the work we’re doing email us at finlabs@synechron.com
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