FASB Urged to Complete Asset Impairment Standard
Speaking at the American Institute of Certified Public Accountants’ (“AICPA”) Banking Conference on Wednesday, September 16th, Federal Reserve chief accountant Steve Merriett pressed the Financial Accounting Standards Board (“FASB”) to complete its oft-delayed asset impairment standard. Merriett said the standard needs to be finished soon so the implementation process can begin, but the FASB has noted that it may rush through the last stages to meet its deadline.
The FASB is scheduled to issue the standard based on proposed Accounting Standards Update No. 2012-260, Financial Instruments—Credit Losses (Subtopic 825-15), by the end of the year. Expected in the standard is a current expected credit loss model (CECL), which would require banks to recognize at every reporting date a loss allowance on financial assets equivalent to the existing estimate of the overall losses anticipated throughout the assets’ life.
Bank regulators expect the standard to become effective in 2019 or 2020. For now, Merriett advised conference attendees that the implementation process would require lots of work. He also mentioned the Federal Reserve-hosted program scheduled next month to help banks prepare for the CECL model.
Want more details on the asset impairment standard? Cherry Bekaert’s Financial Services industry group is available to provide guidance.