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Financial Services

Banks to Change Practices for FASB Credit Loss Standard

A day after the Financial Accounting Standards Board (“FASB”) published its final standard for writing down bad loans and securities, federal banking regulators announced that banks will change how they set aside loss reserves under the new guidance. Regulators want banks to apply Accounting Standards Update No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, in a practical and reasonable manner with respect to their size and risk profile. Smaller banking institutions, for instance, are expected to modify their current allowance procedures to meet the FASB’s new requirements without using expensive and complex. Read More.

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Revenue Recognition Working Drafts Issued for Nine Industries

Earlier this month, the American Institute of Certified Public Accountants’ Financial Reporting Executive Committee (“FinREC”) issued 20 working drafts of interpretative guidance for implementation issues related to the Financial Accounting Standards Board’s Accounting Standards Update No. 2014-09, Revenue From Contracts With Customers. The working drafts offer industry-specific examples for implementing the revenue recognition standard, and pertain to the following sectors: Aerospace and Defense Airlines Broker-dealers Engineering and Construction Contractors Gaming Health Care Asset Management Nonprofits Software Comments on the working drafts must be submitted by Thursday, September 1.

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FASB Publishes Landmark Credit Loss Standard

The Financial Accounting Standards Board (“FASB”) has issued Accounting Standards Update No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments . Published on June 16, the amendments represent the most significant change to the FASB’s guidance for writing down bad loans and securities. The updated guidance has also been added to U.S. GAAP under Topic 326, Financial Instruments—Credit Losses. This ASU removes the “probable” requirement for recognition of credit losses. The 2008 financial crisis was frequently blamed for delayed recognition of impaired loans. The new current expected credit loss (CECL) model allows entities to recognize the full amount of credit losses that are expected based on both historical and forward looking information.. Read More.

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Hedge Accounting Proposal Coming Later This Summer

On June 9, the Financial Accounting Standards Board (“FASB”) announced that proposed updates to its hedge accounting guidance will be released in either August or September. FASB research staffers plan to submit the proposal’s latest version at a meeting in July reflecting changes offered during the “fatal flaw” review. Such reviews are commonly held prior to the FASB release of a key proposed or final update. FASB Technical Director Susan Cosper does not expect staff members to present new issues during next month’s meeting, but rather suggest the FASB to revisit the transaction guidance.

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FASB Credit Loss Standard to be Issued Thursday

The Financial Accounting Standards Board’s (“FASB”) long-anticipated guidance in response to the 2008 financial crisis is scheduled for a Thursday release. The accounting board’s final standard for writing down bad loans and securities will be issued as Accounting Standards Update No. 2016-13, Financial Instruments — Credit Losses (Topic 326), and listed under U.S. GAAP as Topic 326, Financial Instruments — Credit Losses. Barring any changes, public companies must implement the new amendments beginning in 2020.

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FASB Approves Credit Loss Standard

After reviewing the costs and benefits of its new guidance for writing down bad loans and securities , the Financial Accounting Standards Board (“FASB”) voted last week to proceed with a final standard based on the proposed Accounting Standards Update, Financial Instruments—Credit Losses (Subtopic 825-15). The standard will help companies with the financial reporting of credit losses on loans and other financial instruments, and is expected to be released in June. Relative to its decision, the FASB has deferred the new standard’s effective date by one year for public companies that fall under the Securities and Exchange Commission filer requirements. Such public companies must apply the forthcoming guidance to fiscal years, and interim periods. Read More.

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