062611e1_anual_for_asset_quality_review__Description
[0] 9 [Working block] Determine AQR-adjusted [ Core] Common[1] Equity Tier (CET) 1% [Description] 
Banks are only expected to change the 2013 certified accounts in the unlikely event that the AQR highlights issues that should lead to restatement according to local law, e.g. identification of accounting irregularities. Banks will be expected to reflect findings from the AQR in their accounts, where found necessary in the relevant accounting period in 2014 following the AQR. For example, banks may be expected to: - correct specific provisions for individually impaired credit facilities that were sampled in the file review; - correct specific provisions for collectively impaired credit facilities, where the bank’s collective provisioning model is considered as missing crucial aspects required in accounting rules (in this case, banks would be expected to correct internal models and policies); - create a credit valuation adjustment for derivatives. Other findings from the AQR will not be included in 2014 accounts, as they do not explicitly comply with accounting rules (e.g. they do not relate to incurred losses). These include the extrapolation of findings from sampled files to the wider portfolio. Together with the stress test findings, such AQR findings will form the basis for supervisory measures requiring banks to cover potential capital shortfalls. In order to correctly account for all additional incurred losses identified within the previous work blocks, an “AQR-adjusted CET1 ratio” will be calculated for each bank. This AQR-adjusted CET1 ratio (which is calculated according to the single rule book of 1 January 2014) will be used to compute the final stress test outcomes. Banks will neither be required to restate accounts nor to apply the AQR assumptions on an ongoing basis. The AQR-adjusted CET1% is not a de-facto alternative accounting standard.
ECB publishes manual for asset quality review
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