High level expectations for estimation

6.1 The PRA expects the information that a firm produces or uses for the purpose of the IRB approach to be reliable and take proper account of the different users of the information produced (customers, shareholders, regulators, and other market participants).

6.2 The PRA expects firms to establish quantified and documented targets and standards, against which they should test the accuracy of data used in their rating systems. Such tests should cover:

(a) a report and accounts reconciliation, including whether every exposure has a PD and, if applicable, an LGD and an EAD or CF for reporting purposes;

(b) whether the firm's risk control environment has key risk indicators for the purpose of monitoring and ensuring data accuracy;

(c) whether the firm has an adequate business and information technology infrastructure with fully documented processes;

(d) whether the firm has clear and documented standards on ownership of data (including inputs and manipulation) and timeliness of current data (daily, monthly, real time); and

(e) whether the firm has a comprehensive quantitative audit programme.