56 BARBADOS PUBLIC WORKERS’ CO-OPERATIVE CREDIT UNION LIMITED Barbados Public Workers’ Co-operative Credit Union Limited Notes to the Consolidated Financial Statements March 31, 2023 (expressed in Barbados dollars) 24 2 Accounting Policies …continued e) Significant accounting judgments, estimates and assumptions …continued Given market volatility during the year, the Group reviewed the appropriateness of the inputs to its fair values. As a result, and as part of the process to determine fair values of financial instruments the Group applies a level of judgment which is reflective of the current economic conditions and that estimated for the next twelve months with the objective of determining the fair value that is most applicable to those financial instruments Impairment of non-derivative financial assets The measurement of the expected credit loss allowance for financial assets measured at amortised cost is an area that requires the use of complex models and significant assumptions about future economic conditions and credit behaviour (e.g. the likelihood of members defaulting and the resulting losses). Explanation of the inputs, assumptions and estimation techniques used in measuring ECL is detailed in note 2(d). A number of significant judgements are also required in applying the accounting requirements for measuring ECL, such as: • The Group’s criteria for determining if there has been a significant increase in credit risk and hence whether impairment allowances for financial assets should be measured on a lifetime expected credit loss (ECL) basis • Choosing appropriate models and assumptions for the measurement of expected credit losses, including post model adjustments • Determination of associations between macroeconomic scenarios and, economic inputs, such as unemployment levels, inflation, GDP, and the effect on PDs, EADs and LGDs • Establishing the number and relative weightings of forward-looking macroeconomic scenarios for each type of product or market and the associated ECL; and • Establishing groups of similar financial assets for the purposes of measuring ECL. In determining ECL, management judgement is applied, using objective, reasonable and supportable information about current and forecast economic conditions. When determining whether the risk of default has increased significantly since initial recognition, both quantitative and qualitative information is considered, including expert credit assessment, forward looking information and analysis based on the Group’s historical loss experience.
RkJQdWJsaXNoZXIy MTA2MDM=