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FASB Releases Updated Guidance on Long-Term Insurance Policies

The Financial Accounting Standards Board’s (“FASB”) latest amendments impact companies that sell long-term insurance products such as life and disability insurance. Accounting Standards Update (“ASU”) No. 2018-12 – Financial Services —Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts, changes how insurers and underwriters assess liabilities for long-term policies. Underwriters are now required to frequently update their assumptions to estimate payouts to customers and apply a standardized discount rate to calculate liabilities. When underwriting a customer’s policy, insurers previously had to lock in assumptions regarding a customer’s life expectancy or missed payments. The guidance meant liability estimates for long-term. Read More.

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AICPA and Credit Union Advocate Seek New Credit Loss Standard Effective Date

Despite non-public entities already receiving an extra year to comply with the Financial Accounting Standards Board’s (“FASB”) new credit loss standard, the American Institute of Certified Public Accountants (“AICPA”) and the Credit Union National Association (“CUNA”) seek another extension. Both organizations want the FASB to amend the effective date of Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, as well as give privately held banks and credit unions until January 1, 2022, to implement the guidance. Non-public businesses like private community banks and credit unions must apply the new. Read More.

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FASB Issues GAAP Taxonomy Improvements and Implementation Guidance

The Financial Accounting Standards Board (“FASB”) has issued GAAP Taxonomy improvements and implementation guidance concerning the following Accounting Standards Updates (“ASU”): ASU No. 2018-03, Technical Corrections and Improvements to Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities ASU No. 2018-04, Investments—Debt Securities (Topic 320) and Regulated Operations (Topic 980): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 117 and SEC Release No. 33-9273  (SEC Update) ASU No. 2018-05, Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118 (SEC Update) More on these Taxonomy Improvements is available on. Read More.

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FASB Removes Outdated SEC Interpretive Guidance for Financial Instruments Standard

The Financial Accounting Standards Board (“FASB”) has issued Accounting Standards Update (“ASU”) No. 2018-04, Investments — Debt Securities (Topic 320) and Regulated Operations (Topic 980): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 117 and SEC Release No. 33-9273, which eliminates out-of-date interpretive guidance from the Securities and Exchange Commission (“SEC”) on financial instruments. The change to U.S. GAAP was made in response to ASU No. 2016-01, Financial Instruments — Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The U.S. GAAP update is highlighted in Staff Accounting Bulletin (“SAB”) No. 117, in which. Read More.

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SEC Guidance on Tax Reform Added to FASB Codification

Last month, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standards Update (“ASU”) that amends certain Securities and Exchange Commission (“SEC”) guidance under Topic 740 related to the Tax Cuts and Jobs Act. ASU No. 2018-05, Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118, adds guidance to the FASB Accounting Standards Codification that answers questions regarding how certain income tax effects from the Tax Cuts and Jobs Act should be applied to companies’ financial statements. The guidance also lists which financial statement disclosures are required under a measurement period approach. More on ASU No. 2018-05 is available on FASB.org.

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Smaller Banks Can Avoid Using Complex Models in Calculating Loss Reserves

Community bankers could be exempt from using the complex models necessary to comply with the Financial Accounting Standards Board’s (“FASB”) credit loss standard. Banking regulators said that the current expected credit loss model under Accounting Standards Update (ASU) No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, is flexible enough that smaller lending institutions are not required to purchase expensive software or use complex modeling techniques to meet the standard’s provisions for calculating loss reserves. During a February 27 webcast, the Federal Reserve’s Joanne Wakim stated that small banks could calculate loss reserves. Read More.

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