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Credit Loss Standard Effective Date Delayed for Community Banks and Credit Unions

An upcoming clarification to the Financial Accounting Standards Board’s (“FASB”) credit loss standard ensures that credit unions and small banks will get an extra year to implement Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments—Credit Losses (Topic 326). By a unanimous vote on October 24, the FASB confirmed several amendments under Proposed ASU No. 2018-270, Codification Improvements to Topic 326, Financial Instruments—Credit Losses. The proposed changes include merging the implementation dates for private companies’ annual financial statements and their interim financial statements. Private companies must apply the standard for fiscal years, as well as interim periods within such years, starting. Read More.

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Trade Group Asks Federal Regulators to Delay Credit Loss Standard

Months after the banks and trade groups called for additional time to implement the Financial Accounting Standards Board’s (“FASB”) credit loss standard , the Bank Policy Institute wants federal regulators to postpone the most significant change to bank accounting in decades. In a letter to the Financial Stability Oversight Council (“FSOC”), the trade group warned that the financial system could be at risk due to Accounting Standard Update (“ASU”) No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The Bank Policy Institute, which represents several large U.S. banks, said implementing the FASB’s current expected credit loss model could undercut financial stability in a recession or financial crisis. The group believes ASU No. 2016-13. Read More.

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Small Bank Executives Say More Resources Needed to Implement Credit Loss Standard

To prepare for the Financial Accounting Standards Board’s (“FASB”) credit loss standard, Bank of America assembled a 50-employee team. Small community banks, however, lack the resources and workforce to effectively comply with Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This issue was highlighted recently during a panel discussion at the AICPA’s National Conference on Banks and Savings Institutions in Maryland. Greg Saville, executive vice president of Kansas-based First National Bank, argued that his entire bank is of equal size to Bank of America’s assembled team. Saville also noted. Read More.

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Regulators to Offer Flexibility on FASB Credit Loss Standard

When it comes to the Financial Accounting Standards Board’s (“FASB”) credit loss standard, Federal Reserve chief accountant Joanne Wakim said regulators want to give banks flexibility when estimating their expected losses on loans and securities. At the American Institute of Certified Public Accountants’ National Conference on Banks and Savings Institutions this week, Wakim echoed the FASB’s statements that there is no single method to help banks estimate loan losses, and financial institutions should take several factors into account. She also said banks could continue to use current methodologies with changes to inputs and assumptions. Further, Wakim said regulators will not. Read More.

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SEC Chief Accountant Offers Banks Advice on Implementing Credit Loss Standard

Along with attending a session with lawmakers and banking representatives on the Financial Accounting Standards Board’s credit loss standard , the Securities and Exchange Commission’s (“SEC”) Wesley Bricker gave a speech on the matter at the American Institute of Certified Public Accountants’ National Conference on Banks and Savings Institutions in Maryland. During his speech, the SEC chief accountant told financial companies to be careful when implementing Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. He advised banks to have an implementation process in place to understand the possible impact of the standard on their financial situation. Bricker’s reasoning is due to ASU No. 2016-13 requiring banks. Read More.

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Lawmakers and Bank Representatives Discuss FASB Credit Loss Standard

The Financial Accounting Standards Board’s (“FASB”) credit loss standard was a key focus at the American Institute of Certified Public Accountants’ National Conference on Banks and Savings Institutions in Maryland last week. Lawmakers and representatives from the banking industry met with Securities and Exchange Commission (“SEC”) chief accountant Wesley Bricker and FASB member Harold Schroeder to share their concerns regarding the guidance under Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. During a session in Rep. Blaine Luetkemeyer’s office, several regional bank representatives urged Bricker and Schroeder to amend. Read More.

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