The implications of the use of fair value accounting and the incurred loss approach of loss provisioning under International Financial Reporting Standards (IFRS) are cases in point. 1  BCBS Paper : External audits of banks (March 2014). BIS central bankers’ speeches  5  Both have been criticized as contributing to a pro-cyclical behavior in banks’ decision making, i.e.
adding exuberance and fueling investments in the up-turn and triggering downward spirals and throttling investments in the down-turn of the credit cycle 2.