Home/ECL Health Check
Initial diagnostic · IFRS 9 trade receivables

ECL Health Check

The questions your external auditor will ask about your expected credit loss model, answered in three minutes. You get your recognised loss rate, an ECL score and the specific changes we would make first. No file upload.

IFRS 9 simplified approach Findings with best practice Nothing stored unless you ask to talk
What you get

Your recognised loss rate on a colour scale, an ECL score out of 100, and a numbered findings matrix: your current position, best practice and our recommendation for each area.

What it is not

Not an audit, a valuation or accounting advice. A structured first opinion from a team that builds ECL models for GCC corporates.

Our IFRS 9 ECL service

The portfolio

Five numbers that tell us what shape of model your book needs.

Used to label your result; sector peer ranges will be added when our Saudi Exchange extraction is complete.
Government balances age longer and lose less. A single pooled rate misprices both halves of the book.
Before any allowance, as at the last reporting date.
Your recognised loss rate is computed from these two figures.
Above 60%, the provision is a judgement on a handful of names and a matrix alone cannot carry it.
A heavy tail beyond a year with a low allowance is the first thing a reviewer questions.
Recognised loss rate per the books (ECL ÷ gross receivables)–

The method

Approach, technique, segmentation, data window, default, write-off, outlook.

IFRS 9.5.5.15 requires the simplified approach for trade receivables without a significant financing component.
Three of these five mean the model is not really yours, and the reviewer knows it.
IFRS 9.B5.5.35: a matrix must be built on groups that share credit risk characteristics.
Under the simplified approach staging is not required; under the general approach it is the core judgement.
Both are in scope of IFRS 9. In contracting and services they are often larger than the invoiced book.
Rates fixed for a year ignore the collection behaviour of the last four quarters.
Roll rates stabilise at 36 months; 60 lets you see a full credit cycle.
Quarterly snapshots hide most of the movement between buckets that a roll rate is meant to capture.
The default definition is the numerator of every loss rate. IFRS 9 presumes default no later than 90 days past due unless you can document otherwise, segment by segment. It has to be written down and applied the same way in every segment.
Advance payments, retentions, bank guarantees and legal recoveries reduce the loss on a defaulted balance. Ignoring them overstates ECL.
Write-offs move balances out of the ageing. Without one written rule, the tail of the matrix and the loss rates shift with each decision.
Historical rates alone are not ECL. The overlay is where reviewers look first.

Governance

Whether the number sits in a system or in one person's spreadsheet.

Calibrates the score against what the market has already told you.
A listing path adds due diligence and regulator review to the audit.