FASB Rejects Pleas for More Implementation Guidance on Credit Loss Standard
As concerns mount regarding implementation of Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, the American Institute of Certified Public Accountants’ Private Companies Practice Section Technical Issues Committee (“the Committee”) wants the Financial Accounting Standards Board (“FASB”) to provide more guidance on the standard. FASB members, however, have no plans to offer additional implementation guidance.
Addressing the matter this week with Committee representatives, FASB members said that the board’s credit loss standard for writing down losses on bad loans contains sufficient accounting guidance and examples. FASB Vice Chairman James Kroeker defended the decision, saying additional implementation examples aren’t useful unless there is context. FASB Chairman Russell Golden shared similar remarks, noting the difficulty of providing examples when some companies have yet to begin implementing the standard.
Companies do not have to comply with ASU No. 2016-13 until 2020 and 2021. In the meantime, the FASB has scheduled a webcast later this month to educate credit unions and community bankers on the new guidance.