Loan Write-Off — Fully Impaired (100% Provision)
Writing off a loan where recovery is deemed remote and the provision covers the full balance.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Allowance for ECL — Stage 3 | Contra-Asset (−) | 1,500,000.00 | - |
| Corporate Loans Receivable | Asset (−) | - | 1,500,000.00 |
💡 Accountant's Note
Write-off removes the loan and its provision from the balance sheet. It does not change the P&L if fully provisioned. The bank's legal claim against the borrower continues — the write-off is an accounting action, not a forgiveness of debt.
Practitioner & Systems Framework
💻 ERP Architecture
In SAP and Oracle FLEXCUBE, write-offs require multi-level authorization workflows — typically RM, Credit Risk, CFO, and Board approval above certain thresholds. The loan contract is closed in the system but a shadow record must be maintained for recovery tracking. This shadow record is used when 'bank-recovery-written-off-loan' entries are later posted.
⚠️ Audit Flags
Write-offs are a key audit focus. Auditors verify that Board or Board Credit Committee approval was obtained, that legal action has been exhausted or was deemed uneconomical, and that the write-off policy threshold was not circumvented. CBJ requires write-offs above a certain amount to be reported.
📄 Required Documentation
Board/BCC approval minutes, legal counsel opinion confirming recovery is remote, remedial management exit memo, CBJ notification (if above reporting threshold), and maintained off-balance-sheet tracking record.
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Expert Analysis by Qusai Ahmad
General Accountant Supervisor & IFRS Specialist
Specialized in SAP GUI automation and Middle Eastern tax compliance. Building digital tools for the next generation of finance leaders.