1. For the purposes of Article 26(2) of Regulation (EU) No. 575/2013 (CRR), interim profits can only be included in Common Equity Tier 1 (CET1) capital with the prior permission of the competent authority if those profits have been verified by the external auditor and if any foreseeable charge or dividend has been deducted.

In the example above, assuming that the bank has a December year-end, the relevant figure to be considered for inclusion in CET1 capital at end-March is 0, i.e. not including the net interim profit of +70  generated from January to March, as these have not been verified by an external auditor. Therefore, the amount of the interim profit to consider at the end of March is the amount generated since the end of the last financial year.

Although the example given in the question does not reflect the typically quarterly reporting frequency, the principle to be applied is the same, regardless of the reporting frequency.

It is expected that for cases corresponding to the specific example in the question, i.e. where interim losses incurred in earlier periods are followed by subsequent unverified interim profits, this is subject to some supervisory scrutiny.

Institutions shall maintain own funds requirements at all times pursuant to Article 92(1) of the CRR and Article 13(1) of the Commission Delegated Regulation (EU) No 241/2014, which states that "for the purpose of calculating its Common Equity Tier 1 capital during the year, and irrespective of whether the institution closes its financial accounts at the end of each interim period, the institution shall determine its profit and loss accounts and deduct any resulting losses from Common Equity Tier 1 items as they arise". Following the example above, with the institution calculating own funds on a monthly basis, it is therefore required to make deductions from its CET1 capital of -10 and -20 in January and February respectively.

2. Verification of the interim profits of an institution shall be undertaken as frequently as that institution requests permission from their competent authorities to include interim profits in Common Equity Tier 1 capital before the institution has taken a formal decision confirming the final profit or loss of the institution for the year. 

"Adequate level of assurance" to be sought by an institution involves at least a review of interim financial information by the external auditor of the annual accounts of that institution in order to express a conclusion whether, on the basis of the review, the interim financial information subject to the review have been prepared, in all material respects, in accordance with the applicable accounting framework.

The review should cover any material deviation from the accounting policies applied in the last audited financial statements.