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Financial Services

Small Bank Executives Say More Resources Needed to Implement Credit Loss Standard

To prepare for the Financial Accounting Standards Board’s (“FASB”) credit loss standard, Bank of America assembled a 50-employee team. Small community banks, however, lack the resources and workforce to effectively comply with Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This issue was highlighted recently during a panel discussion at the AICPA’s National Conference on Banks and Savings Institutions in Maryland. Greg Saville, executive vice president of Kansas-based First National Bank, argued that his entire bank is of equal size to Bank of America’s assembled team. Saville also noted. Read More.

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Regulators to Offer Flexibility on FASB Credit Loss Standard

When it comes to the Financial Accounting Standards Board’s (“FASB”) credit loss standard, Federal Reserve chief accountant Joanne Wakim said regulators want to give banks flexibility when estimating their expected losses on loans and securities. At the American Institute of Certified Public Accountants’ National Conference on Banks and Savings Institutions this week, Wakim echoed the FASB’s statements that there is no single method to help banks estimate loan losses, and financial institutions should take several factors into account. She also said banks could continue to use current methodologies with changes to inputs and assumptions. Further, Wakim said regulators will not. Read More.

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SEC Chief Accountant Offers Banks Advice on Implementing Credit Loss Standard

Along with attending a session with lawmakers and banking representatives on the Financial Accounting Standards Board’s credit loss standard , the Securities and Exchange Commission’s (“SEC”) Wesley Bricker gave a speech on the matter at the American Institute of Certified Public Accountants’ National Conference on Banks and Savings Institutions in Maryland. During his speech, the SEC chief accountant told financial companies to be careful when implementing Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. He advised banks to have an implementation process in place to understand the possible impact of the standard on their financial situation. Bricker’s reasoning is due to ASU No. 2016-13 requiring banks. Read More.

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Lawmakers and Bank Representatives Discuss FASB Credit Loss Standard

The Financial Accounting Standards Board’s (“FASB”) credit loss standard was a key focus at the American Institute of Certified Public Accountants’ National Conference on Banks and Savings Institutions in Maryland last week. Lawmakers and representatives from the banking industry met with Securities and Exchange Commission (“SEC”) chief accountant Wesley Bricker and FASB member Harold Schroeder to share their concerns regarding the guidance under Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. During a session in Rep. Blaine Luetkemeyer’s office, several regional bank representatives urged Bricker and Schroeder to amend. Read More.

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FinREC Issues Draft Implementation Guidance for FASB Credit Loss Standard

The American Institute of Certified Public Accountants’ Financial Reporting Executive Committee (“FinREC”) has issued the following working drafts on the implementation of Accounting Standards Update No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments: Working Draft: Allowance for Credit Losses Implementation Issue #1: Zero Expected Credit Losses: This working draft offers guidance for situations when a lender may experience no credit loss, even for a defaulted asset. The draft features implementation guidance for applying the zero-loss assumption to instruments like Treasury securities or mortgage bonds supported by the Federal National Mortgage Association. Working Draft: Allowance for. Read More.

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Banks and Trade Groups Want More Time to Implement FASB Credit Loss Standard

A few months have passed since bank regulators introduced a proposal to alleviate the regulatory capital impact of the Financial Accounting Standards Board’s (“FASB”) credit loss standard. Several banks and trade groups, however, believe more time is needed to examine the effects of Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. In comment letters to regulators, individual banks and trade groups propose extending the phase-in period of the standard from three years to five years. Representatives from groups like the Independent Community Bankers of America said that the. Read More.

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