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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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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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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.

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