SEC Official Asks Public Companies to Focus on Key FASB Standards
Securities and Exchange Commission (“SEC”) official Michael Dusza is advising public companies to consider how the adoption of several standards from the Financial Accounting Standards Board (“FASB”) could impact their financial reporting controls. During a speech last month in Washington D.C., Dusza stressed that the accounting changes for revenue recognition, leases, and credit losses are likely to create significant challenges when public companies test internal controls during the adoption phase. Accounting Standards Update (“ASU”) No. 2014-09, Revenue From Contracts With Customers (Topic 606), is effective January 1, 2018 for public business entities. ASU No. 2016-02, Leases (Topic 842), will be. Read More.
Topics: COSO, Credit Losses, FASB, Financial Accounting Standards Board "FASB", Financial Instruments - Credit Losses (Topic 326), Internal Control Reporting, Internal Controls, lease accounting, Leases (Topic 842), Public Companies, Revenue Recognition, SEC, Securities and Exchange Commission "SEC"
FASB to Clarify Troubled Debt Restructurings Guidance
Guidance for troubled debt restructurings under the Financial Accounting Standards Board’s (“FASB”) credit losses standard will soon receive an update. The FASB intends to clarify the recognition and measurement of troubled debt restructurings by allowing banking institutions that calculate allowances for credit losses on modified loans to select a prepayment-adjusted effective interest rate when implementing Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The clarified guidance would allow banks that calculate allowances for their credit losses on troubled debt restructurings to select a prepayment-adjusted effective interest rate when. Read More.
FASB to Address Troubled Debt Restructurings for Credit Loss Standard
Happening early next month is a discussion on the Financial Accounting Standards Board’s (“FASB”) new banking requirements for calculating losses on bad loans. The discussion on Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, is expected to clarify how banks and auditors should account for troubled debt restructurings. At the heart of ASU No. 2016-13, which is considered the FASB’s main response to the 2008 financial crisis, is estimating credit losses. One interpretation of the standard suggests troubled debt restructurings to be assessed on a portfolio basis, but. Read More.
Bank Regulators Issue Interpretive Guidance for Credit Loss Standard
Interpretative guidance has been published describing the scope of Accounting Standards Update (ASU) No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. Issued by federal banking regulators in a frequently asked questions format, the document explains the reasons for the Financial Accounting Standards Board (“FASB”) credit loss standard, the accounting changes, and how banks’ write-down practices should be modified. ASU No. 2016-13 was issued in June and applies to any banking institutions that file regulatory reports wherein the reporting requirements follow U.S. GAAP. The standard will be effective for public companies in 2020;. Read More.
Comment Letters Ask FASB to Limit Future Projects
Some trade groups want the Financial Accounting Standards Board (“FASB”) to provide more leeway for implementing current accounting standards before taking on new projects. In feedback to the FASB’s Invitation to Comment, Agenda Consultation, groups like the American Bankers Association (“ABA”) asked the board to consider the time and costs needed when new standards are implemented. The ABA also noted that standards involving revenue, leases, credit losses and financial instrument measurement and classification require significant undertaking that could last over several years. Other comment letters to the agenda consultation document came from the Institute of Management Accountants (“IMA”), which advised. Read More.
Topics: American Bankers Association "ABA", Credit Losses, Financial Accounting Standards Board "FASB", Financial Instruments, financial reporting, Institute of Management Accountants "IMA", leases, U.S. GAAP
FASB to Create Advisory Panel for Adoption of Asset Impairment Standard
Expected to issue its standard for recording loan losses next year, the Financial Accounting Standards Board (“FASB”) is creating an advisory panel to assist companies in the implementation of Proposed Accounting Standards Update No. 2012-260, Financial Instruments—Credit Losses (Subtopic 825-15). Responding to investors’ complaints about banks using the incurred-loss model for reporting losses during the global financial crisis, the standard will help disclose bad loans and securities, as well as adopt a current-expected-credit-loss (CECL) model. The new model will require banks to evaluate forthcoming losses on loans going bad and establish reserves based on such estimates. Commenting on the advisory. Read More.