Article 26(2)(a) of Regulation (EU) No 575/2013 (CRR) specifies that one of the conditions for interim or year-end profits to qualify for inclusion in Common Equity Tier 1 capital, prior to the institution taking a formal decision confirming the final profit or loss of the institution of for the year, is the verification of those profits by persons independent of the institution responsible for the auditing of the accounts. The second subparagraph of Article 26(2) of the CRR clarifies that this verification shall provide "an adequate level of assurance that those profits have been evaluated in accordance with the principles set out in the applicable accounting framework". (See further Q&A 2013_384).
For the purposes of meeting the requirements of Article 26(2) of the CRR, where the prudential and the accounting scope of consolidation differ, the consolidated financial interim or year-end profit should be reconciled with the consolidated prudential interim or year-end profit prepared according to the methods of consolidation specified under Article 18 of the CRR. This is in line with the principle of reconciliation of prudential and financial figures established in the ITS on the disclosure of own funds requirements (Annex I.3 of Regulation (EU) No 1423/2013).
The reconciliation is to be undertaken to the satisfaction of the relevant competent authority, and is applicable at all relevant levels of consolidation.
The CRR does not require an approval of the year-end profits within the scope of prudential consolidation by the General Meeting of Shareholders. This is without prejudice to any legal requirements in that respect which stem from other European or national legal frameworks.