with the call by the leaders of the group of twenty ( g20 ) in april 2009 to strengthen accounting recognition of loan loss provisions by incorporating a broader range of credit information. one of the consequences of this new framework is the fact that while, in the past, a loss event had to have occurred before an impairment was raised by a bank. the standard now requires that loss provisions be raised earlier and take into account not only past and present page 3 of 9 information but also forward - looking information, which emphasises the future probability of credit losses in determining them. this standard is aimed at resolving the weaknesses identified during the global financial crisis of ‘ too little, too late ’ referred to above, and this will hopefully result in a more robust financial system that is more resilient and hence better able to withstand shocks. the adoption of ifrs 9 will give rise to higher levels of credit impairments. a study undertaken by the european banking authority estimated that the implementation of ifrs 9 would give rise to an average increase of 13 % in loss provisions compared to the current levels under ias 39 ; it is further expected that the core equity tier ( cet ) 1 ratios will decrease by an average of 45 basis points. smaller banks, which mainly use the standardised approach to measuring credit risk, estimate a larger impact on their own fund ratios than the larger banks. estimates of the exact impact differ, however, and only time will tell which of these estimates was accurate. there are those that argue that the adoption of ifrs 9 may in fact increase procyclicality, because during recessionary conditions there may be a sharp fall in cet 1 capital levels and this, in turn, may lead to a sharp easing in credit extension due to the so - called ‘ cliff effect ’ of the staged approach prescribed by ifrs 9. others, notably the bis, reject this argument on the basis that banks, after the global financial crisis, are now better capitalised with higher buffers and thus are better able to absorb losses. they further argue that the early loss recognition of credit losses enables a quicker ‘ clean - up ’ of banks ’ balance sheets, thus enabling them to support economic recovery. this debate is clearly not yet settled and we will need to wait and see how this plays out during the next recession. the economic impact is, however, not only limited to the level of losses and the timing of the recognition ; the implementation of ifrs 9 is also likely to impact on the

the publication of an integrated report by the large and medium size audit firms as this may contribute to improve transparency around transformation initiatives and could assist to accelerate transformation within this sector. full disclosure regarding compliance with governance frameworks such as king iv could also assist in improving governance arrangements within these firms. while this list is not exhaustive, it would be useful if there were a public discourse around these policy questions. we firmly believe that the implementation of some of these proposals may go some way to strengthening the governance within the audit and accounting professions and could assist to further support and possibly strengthen the trust that society places in them. page 8 of 9 conclusion the saying goes that change is the only constant in life. ifrs 9 certainly represents a major change for the banking industry. it is certainly a change that needs to be embraced. the regulated sector will be looking towards their regulators for guidance, hence we need to be up to date and well versed in order to be able to provide effective guidance. to this end banks, auditors and regulators will have to work together to ensure that the implementation of ifrs 9 will be a success. i hope that this workshop will contribute towards this goal. i am sure that during the next one and a half days, there will be very interesting and fruitful discussions that will benefit all the jurisdictions present here today and even after the workshops, i am sure conversations will continue. i wish you well on your ifrs 9 implementation journey and hope you will enjoy the workshop. thank you. page 9 of 9