Frozen GAAP and International Bank for Reconstruction and Development: Difference between pages

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imported>Doug Williamson
(Link with IFRS 16 page.)
 
imported>Doug Williamson
m (Organisation check 6/5/13 - no change)
 
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''Loan documentation - financial covenants''.
(IBRD). One of five institutions that make up the World Bank Group. Its aim is to reduce poverty in middle-income and creditworthy poorer countries by promoting sustainable development.  


The financial model used to set initial [[financial covenant]] levels will be based on the accounting principles in use by the borrower at the time of negotiation, usually referred to as generally accepted accounting principles ('[[GAAP]]').
== See also ==
 
* [[World Bank]]
However accounting standards change over time, and consequently financial covenant ratios can be affected.
 
 
In general loan documentation is worded such that covenants are tested assuming GAAP at the date the loan was negotiated, as this gives both parties the greatest certainty.
 
This is called 'frozen' GAAP, because the initially prevailing GAAP is frozen for the purposes of covenant testing.
 
==See also==
*[[Documentation]]
*[[Financial covenant]]
*[[GAAP]]
*[[IFRS 16]]

Revision as of 10:18, 6 May 2013

(IBRD). One of five institutions that make up the World Bank Group. Its aim is to reduce poverty in middle-income and creditworthy poorer countries by promoting sustainable development.

See also

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