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FinREC Issues Draft Implementation Guidance for FASB Credit Loss Standard

The American Institute of Certified Public Accountants’ Financial Reporting Executive Committee (“FinREC”) has issued the following working drafts on the implementation of Accounting Standards Update No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments: Working Draft: Allowance for Credit Losses Implementation Issue #1: Zero Expected Credit Losses: This working draft offers guidance for situations when a lender may experience no credit loss, even for a defaulted asset. The draft features implementation guidance for applying the zero-loss assumption to instruments like Treasury securities or mortgage bonds supported by the Federal National Mortgage Association. Working Draft: Allowance for. Read More.

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Banks and Trade Groups Want More Time to Implement FASB Credit Loss Standard

A few months have passed since bank regulators introduced a proposal to alleviate the regulatory capital impact of the Financial Accounting Standards Board’s (“FASB”) credit loss standard. Several banks and trade groups, however, believe more time is needed to examine the effects of Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. In comment letters to regulators, individual banks and trade groups propose extending the phase-in period of the standard from three years to five years. Representatives from groups like the Independent Community Bankers of America said that the. Read More.

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Smaller Banks Receive Extension on Implementing Credit Loss Standard

After repeated calls for a delay of its new credit loss standard , the Financial Accounting Standards Board (“FASB”) has agreed to give smaller banks an extra year to comply with Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. FASB chairman Russell Golden said the board had always intended to provide these nonpublic business entities additional time to adopt the ASU, but the language insinuated that financial institutions like credit unions and community banks did not have as much time to prepare as was initially envisioned. Golden acknowledged the confusion smaller banks had in implementing ASU No. 2016-13, stating. Read More.

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Arrival of PCAOB Guidance on Credit Loss Model Unknown

The Public Company Accounting Oversight Board’s (“PCAOB”) interpretive guidance for the Financial Accounting Standards Board’s (“FASB”) new current expected credit losses (“CECL”) model is unlikely to be published before the audit regulator’s proposal on auditing accounting estimates is finalized. Release No. 2017-002, Proposed Auditing Standard—Auditing Accounting Estimates, Including Fair Value Measurements, was issued by the PCAOB to enhance the requirements for auditors examining hard-to-value assets and liabilities such as oil company reserves. Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, is effective in 2020, and will require companies,. 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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Amended Capital Rule for FASB Credit Loss Standard Proposed

The Federal Reserve, Office of the Comptroller of the Currency, and Federal Deposit Insurance Corporation have proposed amending regulatory capital rules to improve consistency among bank regulation and the Financial Accounting Standards Board’s credit loss standard. Issued as Regulatory Capital Rules: Implementation and Transition of the Current Expected Credit Losses Methodology for Allowances and Related Adjustments to the Regulatory Capital Rules and Conforming Amendments to Other Regulations, the proposal would give banks the choice to phase-in the capital impacts of implementing Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial. Read More.

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