(18)The information on the performance of an obligor and on the exposures in default and those not in-default, is the basis for the institution’s internal processes, for the quantification of risk parameters and for the calculation of own funds requirements. Therefore, not only the identification of defaulted obligors but also the process of reclassification of defaulted obligors to non-defaulted status need to be robust and effective. The competent authorities should verify that the prudent reclassification process ensures that obligors are not reclassified to a non-defaulted status where the institution expects that the exposure will probably return to default in a short period of time.